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2024 Florida Statutes
Chapter 625
ACCOUNTING, INVESTMENTS, AND DEPOSITS BY INSURERS
ACCOUNTING, INVESTMENTS, AND DEPOSITS BY INSURERS
CHAPTER 625
ACCOUNTING, INVESTMENTS, AND DEPOSITS BY INSURERS
PART I
ASSETS AND LIABILITIES(ss. 625.01115-625.181)
PART II
INVESTMENTS(ss. 625.301-625.340)
PART III
ADMINISTRATION OF DEPOSITS(ss. 625.50-625.63)
PART IV
DOMESTIC STOCK INSURERS; EQUITY SECURITIES(ss. 625.75-625.83)
PART I
ASSETS AND LIABILITIES625.01115 Definitions.
625.012 “Assets” defined.
625.031 Assets not allowed.
625.041 Liabilities, in general.
625.051 Unearned premium reserve.
625.061 Unearned premium reserve for marine and transportation insurance.
625.071 Special reserve for bail and judicial bonds.
625.081 Reserve for health insurance.
625.091 Losses and loss adjustment expense reserves; liability insurance and workers’ compensation insurance.
625.101 Increase of inadequate loss reserves.
625.111 Title insurance reserve.
625.121 Standard Valuation Law; life insurance.
625.1212 Valuation of policies and contracts issued on or after the operative date of the valuation manual.
625.1214 Use of confidential information.
625.141 Valuation of bonds.
625.151 Valuation of other securities.
625.161 Valuation of property.
625.171 Valuation of purchase money mortgages.
625.172 Replacing certain assets; reporting certain liabilities.
625.181 Assets received as capital or surplus contributions.
625.01115 Definitions.—As used in this chapter, the term “statutory accounting principles” means accounting principles as defined in the National Association of Insurance Commissioners Accounting Practices and Procedures Manual as of March 2002 and subsequent amendments thereto if the methodology remains substantially consistent.
History.—s. 14, ch. 2001-213; s. 864, ch. 2003-261.
625.012 “Assets” defined.—In any determination of the financial condition of an insurer, there shall be allowed as “assets” only such assets as are owned by the insurer and which consist of:
(1) Cash or cash equivalents, in the possession of the insurer, or in transit under its control, and including the true balance of any deposit in a solvent bank, savings and loan association, or trust company. Cash equivalents are short-term, highly liquid investments, with original maturities of 3 months or less, which are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates.
(2) Investments, securities, properties, and loans acquired or held in accordance with this code, and in connection therewith the following items:
(a) Interest due or accrued on any bond or evidence of indebtedness which is not in default and which is not valued on a basis including accrued interest.
(b) Declared and unpaid dividends on stock and shares, unless such amount has otherwise been allowed as an asset.
(c) Interest due or accrued upon a collateral loan in an amount not to exceed 1 year’s interest thereon.
(d) Interest due or accrued on deposits in solvent banks, savings and loan associations, and trust companies, and interest due or accrued on other assets, if such interest is in the judgment of the office a collectible asset.
(e) Interest due or accrued on a current mortgage loan, in an amount not exceeding in any event the amount, if any, of the excess of the value of the property less delinquent taxes thereon over the unpaid principal; but in no event shall interest accrued for a period in excess of 90 days be allowed as an asset.
(f) Rent due or accrued on real property if such rent is not in arrears for more than 3 months, and rent more than 3 months in arrears if the payment of such rent is adequately secured by property held in the name of the tenant and conveyed to the insurer as collateral.
(g) The unaccrued portion of taxes paid prior to the due date on real property.
(3) Premium notes, policy loans, and other policy assets and liens on policies and certificates of life insurance and annuity contracts and accrued interest thereon, in an amount not exceeding the legal reserve and other policy liabilities carried on each individual policy.
(4) The net amount of uncollected and deferred premiums and annuity considerations in the case of a life insurer.
(5)(a) Premiums in the course of collection, other than for life insurance, not more than 3 months past due, less commissions payable thereon. The foregoing limitation shall not apply to premiums payable directly or indirectly by the United States Government or by any of its instrumentalities. All premiums, excluding commissions payable thereon, due from a controlling or controlled person shall not be allowed as an asset to the extent that:
1. The premiums collected by the controlling or controlled person and not remitted to the insurer are not held in a trust account with a bank or other depository approved by the office. Such funds shall be held as trust funds and may not be commingled with any other funds of the controlling or controlled person. Disbursements from the trust account may be made only to the insurer, the insured, or, for the purpose of returning premiums, an entity who is entitled to returned premiums on behalf of the insured. A written copy of the trust agreement must be filed with and approved by the office prior to its becoming effective. However, the investment income derived from the trust may be allocated as the parties deem proper. A controlling or controlled person shall deposit premiums collected into the trust account within 15 working days after collection;
2. The controlling or controlled person has not provided to the insurer and the insurer has not maintained in its possession an unexpired, clean irrevocable letter of credit, payable to the insurer, issued for a term of not less than 1 year and in conformity with the requirements set forth in this subparagraph, the amount of which equals or exceeds the liability of the controlling or controlled person to the insurer, at all times during the period which the letter of credit is in effect, for premiums collected by the controlling or controlled person. The requirements are that such letter of credit be issued under arrangements satisfactory to the office and that the letter be issued by a banking institution which is a member of the Federal Reserve System and which has a financial standing satisfactory to the office;
3. The controlling or controlled person has not provided to the insurer and the insurer maintained in its possession evidence that the controlling or controlled person has purchased and has currently in effect a financial guaranty bond, payable to the insurer, issued for a term of not less than 1 year and which is in conformity with the requirements set forth in this subparagraph, the amount of which equals or exceeds the liability of the controlling or controlled person to the insurer, at all times during which the financial guaranty bond is in effect, for the premiums collected by the controlling or controlled person. The requirements are that such a financial guaranty bond shall be issued under an arrangement satisfactory to the office and that the financial guaranty bond be issued by an insurer authorized to transact such business in Florida and which has a financial standing satisfactory to the office and which is neither controlled nor controlling in relation to either the insurer or the person for whom the bond is purchased; or
4. A financial evaluation indicates that the controlling or controlled person is unlikely to have the ability to pay such premiums as they become due. The financial evaluation shall be based on a review of the books and records of the controlling or controlled person.
(b) For the purpose of this subsection:
1. “Controlling person” means any person owning, directly or indirectly, 25 percent or more of the voting securities of the insurer.
2. “Controlled person” means any person that is, directly or indirectly, owned or controlled by a controlling person.
3. “Controlling” or “controlled person” means any person that individually or in combination with other such persons owes to the insurer an amount that exceeds 50 percent of the insurer’s total premiums in course of collection as stated on the insurer’s financial statement.
(c) The office shall disapprove any trust agreement filed pursuant to paragraph (a) which does not assure the safety of the premiums collected.
(6) Installment premiums other than life insurance premiums to the extent of the unearned premium reserve carried on the policy to which such premiums apply.
(7) Notes and like written obligations not past due, taken for premiums other than life insurance premiums, on policies permitted to be issued on such basis, to the extent of the unearned premium reserves carried thereon.
(8) The full amount of reinsurance recoverable by a ceding insurer from a solvent reinsurer and which reinsurance is authorized under s. 624.610.
(9) Amounts receivable by an assuming insurer representing funds withheld by a solvent ceding insurer under a reinsurance treaty.
(10) Deposits or equities recoverable from underwriting associations, syndicates, and reinsurance funds, or from any suspended banking institution, to the extent deemed by the office available for the payment of losses and claims and at values to be determined by it.
(11) Electronic and mechanical machines, including computer-operating software equipment and system software constituting a data processing and accounting system, the cost of which is at least $25,000, which cost shall be amortized in full over a period not to exceed 3 calendar years. The aggregate amount admitted under this subsection shall be limited to 3 percent of the insurer’s capital and surplus, adjusted to exclude any electronic data processing equipment and operating software, net deferred tax assets, and net positive goodwill, as reported on the insurer’s most recently filed annual statement.
(12) Goodwill arising from acquisitions and mergers occurring after January 1, 2001.
(13) Loans or advances by an insurer to its parent or principal owner if approved by the office.
(14) Current income tax recoverables.
(15)(a) Assessments levied pursuant to s. 631.57(3)(a) and (e) or s. 631.914 which are paid before policy surcharges are collected and result in a receivable for policy surcharges to be collected in the future. This amount, to the extent it is likely that it will be realized, meets the definition of an admissible asset as specified in the National Association of Insurance Commissioners’ Statement of Statutory Accounting Principles No. 4. The asset shall be established and recorded separately from the liability regardless of whether it is based on a retrospective or prospective premium-based assessment. If an insurer is unable to fully recoup the amount of the assessment because of a reduction in writings or withdrawal from the market, the amount recorded as an asset shall be reduced to the amount reasonably expected to be recouped.
(b) Assessments levied as installments pursuant to s. 631.57(3)(e)3. or s. 631.914 which are paid after policy surcharges are collected so that the recognition of assets is based on actual premium written offset by the obligation to the Florida Insurance Guaranty Association or the Florida Workers’ Compensation Insurance Guaranty Association, Incorporated.
(16) Capitalized interest.
(17) Other assets, not inconsistent with the provisions of this section, deemed by the office to be available for the payment of losses and claims, at values to be determined by it.
History.—s. 109, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 87, 98, 809(1st), ch. 82-243; s. 28, ch. 83-288; s. 11, ch. 85-245; ss. 184, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 15, ch. 2001-213; s. 865, ch. 2003-261; s. 1, ch. 2015-167; s. 78, ch. 2016-10; s. 8, ch. 2017-132; s. 4, ch. 2020-54.
625.031 Assets not allowed.—In addition to assets impliedly excluded by the provisions of s. 625.012, the following expressly shall not be allowed as assets in any determination of the financial condition of an insurer:
(1) Trade names, patents, agreements not to compete, and other like intangible assets.
(2) Advances (other than policy loans) to officers and directors, whether secured or not, and advances to employees, agents, and other persons on personal security only.
(3) Stock of such insurer, owned by it, or any material equity therein or loans secured thereby, or any material proportionate interest in such stock acquired or held through the ownership by such insurer of an interest in another firm, corporation, or business unit.
(4) Furniture, fixtures, furnishings, safes, vehicles, libraries, stationery, literature, and supplies, other than data processing and accounting systems authorized under s. 625.012(11), except in the case of title insurers such materials and plants as the insurer is expressly authorized to invest in under s. 625.330 and except, in the case of any insurer, such personal property as the insurer is permitted to hold pursuant to part II of this chapter, or which is acquired through foreclosure of chattel mortgages acquired pursuant to s. 625.329, or which is reasonably necessary for the maintenance and operation of real estate lawfully acquired and held by the insurer other than real estate used by it for home office, branch office, and similar purposes.
(5) The amount, if any, by which the aggregate book value of investments as carried in the ledger assets of the insurer exceeds the aggregate value thereof as determined under this code.
(6) Bonds, notes, or other evidences of indebtedness which are secured by mortgages or deeds of trust which are in default.
(7) Prepaid and deferred expenses.
History.—s. 111, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 89, 98, 809(1st), ch. 82-243; s. 40, ch. 89-360; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 16, ch. 2001-213.
625.041 Liabilities, in general.—In any determination of the financial condition of an insurer, liabilities to be charged against its assets include:
(1) The amount, estimated in accordance with this code, necessary to pay all of its unpaid losses and claims incurred on or before the date of statement, whether reported or unreported, together with the expenses of adjustment or settlement thereof.
(2) With respect to title insurance, the amount, estimated in accordance with this code, necessary to pay all of its known unpaid losses and claims incurred on or before the date of statement, together with the expenses of adjustment or settlement thereof. This requirement is in addition to the reserves required under s. 625.111.
(3) With respect to life and health insurance and annuity contracts:
(a) The amount of reserves on life insurance policies and annuity contracts in force, valued according to the tables of mortality, rates of interest, and methods adopted pursuant to this code which are applicable thereto.
(b) Reserves for disability benefits, for both active and disabled lives.
(c) Reserves for accidental death benefits.
(d) Any additional reserves that may be required by the office in accordance with practice formulated or approved by the National Association of Insurance Commissioners or its successor organization, on account of such insurance, including contract and premium deficiency reserves.
(4) With respect to insurance other than that specified in subsections (2) and (3), the amount of reserves equal to the unearned portions of the gross premiums charged on policies in force, computed in accordance with this part.
(5) Taxes, expenses, and other obligations due or accrued at the date of the statement.
(6) An insurer in this state that writes workers’ compensation insurance shall accrue a liability on its financial statements for all Special Disability Trust Fund assessments that are due within the current calendar year. Those insurers shall also disclose in the notes to the financial statements required to be filed pursuant to s. 624.424 an estimate of future Special Disability Trust Fund assessments if the assessments are likely to occur and can be estimated with reasonable certainty.
History.—s. 112, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 90, 98, 809(1st), ch. 82-243; s. 41, ch. 89-360; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 20, ch. 95-211; s. 17, ch. 2001-213; s. 5, ch. 2002-247; s. 6, ch. 2002-282; s. 866, ch. 2003-261; s. 1, ch. 2014-112; s. 1, ch. 2014-132.
625.051 Unearned premium reserve.—
(1) As to insurance against loss or damage to property, except as provided in s. 625.061, and as to all general casualty insurance and surety insurance, every insurer shall maintain an unearned premium reserve on all policies in force.
(2) The office may require that such reserves be equal to the unearned portions of the gross premiums in force after deducting applicable reinsurance in solvent insurers as computed on each respective risk from the date of issue of the policy. If the office does not so require, the portions of the gross premium in force, less applicable reinsurance in solvent insurers, to be held as an unearned premium reserve, shall be computed according to the following table:
Term for which policy Reserve for unearned
was written premium
1 year or less..........1/2
2 years..........1st year—3/4
2nd year—1/4
3 years..........1st year—5/6
2nd year—1/2
3rd year—1/6
4 years..........1st year—7/8
2nd year—5/8
3rd year—3/8
4th year—1/8
5 years..........1st year—9/10
2nd year—7/10
3rd year—1/2
4th year—3/10
5th year—1/10
Over 5 years..........pro rata
(3) In lieu of computation according to the foregoing table, the insurer at its option may compute all of such reserves on a monthly or more frequent pro rata basis.
(4) After adopting a method for computing such reserve, an insurer shall not change methods without approval of the public insurance supervisory official of the state of domicile.
(5) This section does not apply to title insurance.
History.—s. 113, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 98, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 867, ch. 2003-261.
625.061 Unearned premium reserve for marine and transportation insurance.—As to marine and transportation insurance, the entire amount of premiums on trip risks not terminated shall be deemed unearned; and the office may require the insurer to carry a reserve equal to 100 percent of premiums on trip risks written during the month ended as of the date of statement.
History.—s. 114, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168, s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 98, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 868, ch. 2003-261.
625.071 Special reserve for bail and judicial bonds.—In lieu of the unearned premium reserve required on surety bonds under s. 625.051, the office may require any surety insurer or limited surety insurer to set up and maintain a reserve on all bail bonds or other single-premium bonds without definite expiration date, furnished in judicial proceedings, equal to the lesser of 35 percent of the bail premiums in force or $7 per $1,000 of bail liability. Such reserve shall be reported as a liability in financial statements required to be filed with the office. Each insurer shall file a supplementary schedule showing bail premiums in force and bail liability and the associated special reserve for bail and judicial bonds with financial statements required by s. 624.424. Bail premiums in force do not include amounts retained by licensed bail bond agents or appointed managing general agents, but may not be less than 6.5 percent of the total consideration received for all bail bonds in force.
History.—s. 115, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 98, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 1, ch. 2001-248; s. 869, ch. 2003-261; s. 15, ch. 2018-102.
625.081 Reserve for health insurance.—For all health insurance policies, the insurer shall maintain an active life reserve which places a sound value on the insurer’s liabilities under such policies; is not less than the reserve according to appropriate standards set forth in rules issued by the commission; and, with the exception of credit disability insurance, in no event, is less in the aggregate than the pro rata gross unearned premiums for such policies.
History.—s. 116, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 91, 98, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 870, ch. 2003-261; s. 6, ch. 2004-370; s. 151, ch. 2004-390.
625.091 Losses and loss adjustment expense reserves; liability insurance and workers’ compensation insurance.—The reserve liabilities recorded in the insurer’s annual statement and financial statements for unpaid losses and loss adjustment expenses shall be the estimated value of its claims when ultimately settled and shall be computed as follows:
(1) For all liability and workers’ compensation claims, the statement and statutory reserves and loss adjustment expenses shall be in accordance with the form of the annual statement as required in s. 624.424, and shall include the computed, determined, or estimated value of the unpaid reported claims and loss adjustment expenses, allocated and unallocated, and a provision for loss and loss adjustment expenses, allocated and unallocated, that are incurred but not reported. For claims under liability policies, the reserve for reported claims shall not be less than $1,000 for each outstanding liability suit.
(2)(a) Workers’ compensation tabular reserves and long-term disability claims including death claims may be reserved at the present value at 4 percent interest of the determined and the estimated future payments.
(b) If workers’ compensation reserves are discounted in accordance with paragraph (a), discounted loss and loss expense reserves shall be used in the computation of excess statutory reserves over statement reserves.
(3) Structured settlements may be used to reduce reserves if:
(a) There is the purchase of an annuity by the insurer to fund future payments that are fixed or determined by settlement provisions or statutes wherein the claimant is the payee, the transaction may be treated as a paid claim and the reserve taken down accordingly. The appropriate disclosure of the contingent liability for such amount must be disclosed in notes to the financial statements of the annual statement; or
(b) The insurer assigns the obligation to make periodic payments to a third party and obtains a full and complete release from the claimant, the claim may be treated as a paid claim without additional disclosure.
(4)(a) Accounting credit for anticipated recoveries from the Special Disability Trust Fund may only be taken in the determination of loss reserves and may not be reflected on the financial statements in any manner other than that allowed pursuant to this subsection.
(b) An insurer may only take accounting credit for anticipated recoveries from the Special Disability Trust Fund for each proof of claim which the fund has reviewed, determined to be a valid claim and so notified the carrier, and extended a payment offer; or a reimbursement request audited and approved for payment or paid by the fund.
(c)1. Each insurer shall separately identify anticipated recoveries from the Special Disability Trust Fund on the annual statement required to be filed pursuant to s. 624.424.
2. For all financial statements filed with the office, each insurer shall disclose in the notes to the financial statements of any financial statement required to be filed pursuant to s. 624.424 any credit in loss reserves taken for anticipated recoveries from the Special Disability Trust Fund. That disclosure shall include:
a. The amount of credit taken by the insurer in the determination of its loss reserves for the prior calendar year and the current reporting period on a year-to-date basis.
b. The amount of payments received by the insurer from the Special Disability Trust Fund during the prior calendar year and the year-to-date recoveries for the current year.
c. The amount the insurer was assessed by the Special Disability Trust Fund during the prior calendar year and during the current calendar year.
History.—s. 117, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 86, ch. 79-40; ss. 2, 3, ch. 81-318; ss. 92, 98, 809(1st), ch. 82-243; ss. 47, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 2, ch. 97-262; s. 871, ch. 2003-261; s. 141, ch. 2020-2; s. 45, ch. 2021-51.
625.101 Increase of inadequate loss reserves.—If loss experience shows that an insurer’s loss reserves, however computed or estimated, are inadequate, the office shall require the insurer to maintain loss reserves in such additional amount as is needed to make them adequate. This section does not apply as to life insurance.
History.—s. 118, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 98, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 872, ch. 2003-261.
625.111 Title insurance reserve.—In addition to an adequate reserve as to outstanding losses relating to known claims as required under s. 625.041, a domestic title insurer shall establish, segregate, and maintain a guaranty fund or unearned premium reserve as provided in this section. The sums to be reserved for unearned premiums on title guarantees and policies shall be considered and constitute unearned portions of the original premiums and shall be charged as a reserve liability of the insurer in determining its financial condition. Such reserved funds shall be withdrawn from the use of the insurer for its general purposes, impressed with a trust in favor of the holders of title guarantees and policies, and held available for reinsurance of the title guarantees and policies in the event of the insolvency of the insurer. This section does not preclude the insurer from investing such reserve in investments authorized by law, and the income from such investments shall be included in the general income of the insurer and may be used by such insurer for any lawful purpose.
(1) For an unearned premium reserve established on or after July 1, 1999, such reserve must be in an amount at least equal to the sum of paragraphs (a), (b), and (d) for title insurers holding less than $50 million in surplus as to policyholders as of the previous year end and the sum of paragraphs (c) and (d) for title insurers holding $50 million or more in surplus as to policyholders as of the previous year end or title insurers that are members of an insurance holding company system holding $1 billion or more in surplus as to policyholders and a superior, excellent, exceptional, or equivalent financial strength rating by a rating agency acceptable to the office:
(a) A reserve with respect to unearned premiums for policies written or title liability assumed in reinsurance before July 1, 1999, equal to the reserve established on June 30, 1999, for those unearned premiums with such reserve being subsequently released as provided in subsection (2). For domestic title insurers subject to this section, such amounts shall be calculated in accordance with state law in effect at the time the associated premiums were written or assumed and as amended before July 1, 1999.
(b) A total amount equal to 30 cents for each $1,000 of net retained liability for policies written or title liability assumed in reinsurance on or after July 1, 1999, with such reserve being subsequently released as provided in subsection (2). For the purpose of calculating this reserve, the total of the net retained liability for all simultaneous issue policies covering a single risk shall be equal to the liability for the policy with the highest limit covering that single risk, net of any liability ceded in reinsurance.
(c) On or after January 1, 2014, for title insurers holding $50 million or more in surplus as to policyholders as of the previous year end or title insurers that are members of an insurance holding company system holding $1 billion or more in surplus as to policyholders and a superior, excellent, exceptional, or equivalent financial strength rating by a rating agency acceptable to the office, a minimum of 6.5 percent of the total of the following:
1. Direct premiums written; and
2. Premiums for reinsurance assumed, plus other income, less premiums for reinsurance ceded as displayed in Schedule P of the title insurer’s most recent annual statement filed with the office with such reserve being subsequently released as provided in subsection (2). Title insurers with less than $50 million in surplus as to policyholders and that are not members of an insurance holding company system with $1 billion or more in surplus as to policyholders and a superior, excellent, exceptional, or equivalent financial strength rating by a rating agency acceptable to the office must continue to record unearned premium reserve in accordance with paragraph (b).
(d) An additional amount, if deemed necessary by a qualified actuary, to be subsequently released as provided in subsection (2). Using financial results as of December 31 of each year, all domestic title insurers shall obtain a Statement of Actuarial Opinion from a qualified actuary regarding the insurer’s loss and loss adjustment expense reserves, including reserves for known claims, incurred but not reported claims, and unallocated loss adjustment expenses. The actuarial opinion must conform to the annual statement instructions for title insurers adopted by the National Association of Insurance Commissioners and include the actuary’s professional opinion of the insurer’s reserves as of the date of the annual statement. If the amount of the reserve stated in the opinion and displayed in Schedule P of the annual statement for that reporting date is greater than the sum of the known claim reserve and unearned premium reserve as calculated under this section, as of the same reporting date and including any previous actuarial provisions added at earlier dates, the insurer shall add to the insurer’s unearned premium reserve an actuarial amount equal to the reserve shown in the actuarial opinion, minus the known claim reserve and the unearned premium reserve, as of the current reporting date and calculated in accordance with this section, but not calculated as of any date before December 31, 1999. The comparison shall be made using that line on Schedule P displaying the Total Net Loss and Loss Adjustment Expense which is comprised of the Known Claim Reserve, and any associated Adverse Development Reserve, the reserve for Incurred But Not Reported Losses, and Unallocated Loss Adjustment Expenses.
(2) With respect to reserves established in accordance with:
(a) Paragraph (1)(a), the domestic title insurer shall release the reserve over the subsequent 20 years as provided in this paragraph. The insurer shall release 30 percent of the initial aggregate sum during 1999, with one quarter of that amount being released on March 31, June 30, September 30, and December 31, 1999, with the March 31 and June 30 releases to be retroactive and reflected on the September 30 financial statements. Thereafter, the insurer shall release, on the same quarterly basis as specified for reserves released during 1999, a percentage of the initial aggregate sum as follows: 15 percent during calendar year 2000, 10 percent during each of calendar years 2001 and 2002, 5 percent during each of calendar years 2003 and 2004, 3 percent during each of calendar years 2005 and 2006, 2 percent during each of calendar years 2007-2013, and 1 percent during each of calendar years 2014-2018.
(b) Paragraph (1)(b), the unearned premium for policies written or title liability assumed during a particular calendar year shall be earned, and released from reserve, over the subsequent 20 years as provided in this paragraph. The insurer shall release 30 percent of the initial sum during the year following the year the premium was written or assumed, with one quarter of that amount being released on March 31, June 30, September 30, and December 31 of such year. Thereafter, the insurer shall release, on the same quarterly basis as specified for reserves released during the year following the year the premium was written or assumed, a percentage of the initial sum as follows: 15 percent during the next succeeding year, 10 percent during each of the next succeeding 2 years, 5 percent during each of the next succeeding 2 years, 3 percent during each of the next succeeding 2 years, 2 percent during each of the next succeeding 7 years, and 1 percent during each of the next succeeding 5 years.
(c) Paragraph (1)(c), the unearned premium for policies written or title liability assumed during a particular calendar year shall be earned, and released from reserve, over the subsequent 20 years at an amortization rate not to exceed the formula in this paragraph. The insurer shall release 35 percent of the initial sum during the year following the year the premium was written or assumed, with one quarter of that amount being released on March 31, June 30, September 30, and December 31 of such year. Thereafter, the insurer shall release, on the same quarterly basis, as specified for reserve released during the year following the year the premium was written or assumed, a percentage of the initial sum as follows: 15 percent during each year of the next succeeding 2 years, 10 percent during the next succeeding year, 3 percent during each of the next succeeding 3 years, 2 percent during each of the succeeding 3 years, and 1 percent during each of the next succeeding 10 years.
(d) Paragraph (1)(d), any additional amount established in any calendar year shall be released in the years subsequent to its establishment as provided in paragraph (c), with the timing and percentage of releases being in all respects identical to those of unearned premium reserves that are calculated as provided in paragraph (c) and established with regard to premiums written or liability assumed in reinsurance in the same year as the year in which any additional amount was originally established.
(3) If a title insurer that is organized under the laws of another state transfers its domicile to this state, the insurer must calculate an adjusted statutory or unearned premium reserve as of the effective date of its redomestication to this state. The adjusted statutory or unearned premium reserve must be calculated as if subsections (1) and (2) had been in effect as to the insurer’s foreign statutory premium reserve for all years beginning 20 years before the date of redomestication. For purposes of calculating the adjusted statutory or unearned premium reserve, the balance of the insurer’s foreign statutory premium reserve as of the date 20 years before the redomestication shall be $0. If the adjusted statutory or unearned premium reserve exceeds the aggregate amount set aside for statutory or unearned premium in the insurer’s annual statement on file with the office on the date of redomestication, the insurer must, out of the total charges for policies of title insurance, increase its statutory or unearned premium reserve by an amount equal to one-sixth of that excess in each of the following 6 years, beginning with the calendar year that includes the redomestication, until the entire excess has been added. If the adjusted statutory or unearned premium reserve is less than the aggregate amount set aside for statutory or unearned premiums in the insurer’s annual statement on file with the office on the date of redomestication, the insurer may release the excess into surplus.
(4) At any reporting date, the amount of the required releases of existing unearned premium reserves under subsection (2) shall be calculated and deducted from the total unearned premium reserve before any additional amount is established for the current calendar year in accordance with paragraph (1)(d).
(5) A domestic title insurer is not required to record a separate bulk reserve. However, if a separate bulk reserve is recorded, the statutory premium reserve must be reduced by the amount recorded for such bulk reserve. A domestic title insurer must obtain approval from the office before using or recording a bulk reserve.
(6) As used in this section, the term:
(a) “Bulk reserve” means provision for subsequent development on known claims.
(b) “Net retained liability” means the total liability retained by a title insurer for a single risk, after taking into account the deduction for ceded liability, if any.
(c) “Qualified actuary” means a person who is, as detailed in the National Association of Insurance Commissioners’ Annual Statement Instructions:
1. A member in good standing of the Casualty Actuarial Society;
2. A member in good standing of the American Academy of Actuaries who has been approved as qualified for signing casualty loss reserve opinions by the Casualty Practice Council of the American Academy of Actuaries; or
3. A person who otherwise has competency in loss reserve evaluation as demonstrated to the satisfaction of the insurance regulatory official of the domiciliary state. In such case, at least 90 days before filing its annual statement, the insurer must request that the person be deemed qualified and that request must be approved or denied. The request must include the National Association of Insurance Commissioners’ Biographical Form and a list of all loss reserve opinions issued in the last 3 years by this person.
(d) “Single risk” means the insured amount of a title insurance policy, except that where two or more title insurance policies are issued simultaneously covering different estates in the same real property, “single risk” means the sum of the insured amounts of all such policies. A title insurance policy insuring a mortgage interest, a claim payment under which reduces the insured amount of a fee or leasehold title insurance policy, shall be excluded in computing the amount of a single risk to the extent that the insured amount of the mortgage title insurance policy does not exceed the insured amount of the fee or leasehold title insurance policy.
History.—s. 119, ch. 59-205; s. 2, ch. 65-359; s. 1, ch. 72-363; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 93, 98, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 1, ch. 92-34; s. 2, ch. 93-253; s. 2, ch. 99-286; s. 1, ch. 99-336; s. 2, ch. 2014-112; s. 2, ch. 2014-132; s. 1, ch. 2016-57; s. 38, ch. 2017-3.
625.121 Standard Valuation Law; life insurance.—
(1) SHORT TITLE.—This section shall be known as the “Standard Valuation Law.”
(2) ANNUAL VALUATION.—The office shall annually value, or cause to be valued, the reserves for all outstanding life insurance policies and annuity and pure endowment contracts of each life insurer doing business in this state. In the case of an alien insurer, such valuation is limited to its insurance transactions in the United States. In calculating reserves, the office may use group methods and approximate averages for fractions of a year or otherwise, and may accept the insurer’s calculation of such reserves. In lieu of the valuation of the reserves required of a foreign or alien insurer, the office may accept any valuation made or caused to be made by the insurance supervisory official of any state or other jurisdiction if the valuation complies with the minimum standard provided under this section. If a valuation is made by the office, the office may use its actuary or employ an actuary for that purpose; and the reasonable compensation of the actuary, at a rate approved by the office, plus reimbursement of travel expenses pursuant to s. 624.320, supported by an itemized statement of such compensation and expenses, shall be paid by the insurer upon demand of the office. If a domestic insurer furnishes the office with a valuation of its outstanding policies as computed by its own actuary or by an actuary deemed satisfactory for that purpose by the office, the valuation shall be verified by the actuary of the office without cost to the insurer. This section applies to the calculation of reserves for policies and contracts not subject to s. 625.1212.
(3) ACTUARIAL OPINION OF RESERVES.—
(a) Each life insurer doing business in this state shall annually submit the opinion of a qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the commission by rule are computed appropriately, are based on assumptions that satisfy contractual provisions, are consistent with prior reported amounts, and comply with applicable laws of this state. The commission by rule shall define the specifics of this opinion and add any other items determined necessary to its scope.
1. The opinion shall be submitted with the annual statement and must reflect the valuation of such reserve liabilities for each year ending on or before December 31 of the year before the operative date of the valuation manual as defined in s. 625.1212(2), and in accordance with s. 625.1212(4) for each year thereafter.
2. The opinion applies to all business in force, including individual and group health insurance plans, in the form and substance acceptable to the office as specified by rule of the commission.
3. The commission may adopt rules providing the standards of the actuarial opinion consistent with standards adopted by the Actuarial Standards Board on December 31, 2013, and subsequent revisions thereto if the standards remain substantially consistent.
4. The office may accept an opinion filed by a foreign or alien insurer with the insurance supervisory official of another state if the office determines that the opinion reasonably meets the requirements applicable to an insurer domiciled in this state.
5. As used in this subsection, the term “qualified actuary” means a member in good standing of the American Academy of Actuaries who also meets the requirements specified by rule of the commission.
6. Disciplinary action by the office against the insurer or the qualified actuary shall be in accordance with the insurance code and related rules adopted by the commission.
7. A memorandum in the form and substance specified by rule shall be prepared to support each actuarial opinion.
8. If the insurer fails to provide a supporting memorandum at the request of the office within a period specified by rule of the commission, or if the office determines that the supporting memorandum provided by the insurer fails to meet the standards prescribed by rule of the commission, the office may engage a qualified actuary at the expense of the insurer to review the opinion and the basis for the opinion and prepare such supporting memorandum as required by the office.
9. Except as otherwise provided in this subparagraph, any memorandum or other material in support of the opinion is confidential and exempt from s. 119.07(1) and is not subject to subpoena or discovery directly from the office; however, the memorandum or other material may be released by the office with the written consent of the insurer, or to the American Academy of Actuaries upon request stating that the memorandum or other material is required for the purpose of professional disciplinary proceedings and setting forth procedures satisfactory to the office for preserving the confidentiality of the memorandum or other material. If any portion of the confidential memorandum is cited by the insurer in its marketing, is cited before any governmental agency other than a state insurance department, or is released by the insurer to the news media, no portion of the memorandum is confidential. Neither the office nor any person who receives documents, materials, or other information while acting under the authority of the office or with whom such information is shared pursuant to this paragraph may testify in a private civil action concerning the confidential documents, materials, or information. However, the department or office may use the confidential and exempt information in the furtherance of any regulatory or legal action brought against an insurer as a part of the official duties of the department or office. A waiver of an applicable privilege or claim of confidentiality in the documents, materials, or information may not occur as a result of disclosure to the office under this section or any other section of the insurance code, or as a result of sharing as authorized under s. 624.4212.
(b) In addition to the opinion required by paragraph (a), the office may, pursuant to commission rule, require an opinion of the same qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the commission by rule, when considered in light of the assets held by the insurer with respect to the reserves and related actuarial items, including, but not limited to, the investment earnings on the assets and considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the insurer’s obligations under the policies and contracts, including, but not limited to, the benefits under, and expenses associated with, the policies and contracts.
(c) The commission may provide by rule for a transition period for establishing any higher reserves which the qualified actuary may deem necessary in order to render the opinion required by this subsection.
(4) MINIMUM STANDARD FOR VALUATION OF POLICIES AND CONTRACTS ISSUED BEFORE OPERATIVE DATE OF STANDARD NONFORFEITURE LAW.—The minimum standard for the valuation of all such policies and contracts issued prior to the operative date of s. 627.476 (Standard Nonforfeiture Law) shall be any basis satisfactory to the office. Any basis satisfactory to the former Department of Insurance on the effective date of this code shall be deemed to meet such minimum standards.
(5) MINIMUM STANDARD FOR VALUATION OF POLICIES AND CONTRACTS ISSUED ON OR AFTER OPERATIVE DATE OF THE STANDARD NONFORFEITURE LAW.—Except as otherwise provided in paragraph (h) and subsections (6), (13), and (14), the minimum standard for the valuation of all such policies and contracts issued on or after the operative date of s. 627.476 shall be the commissioners’ reserve valuation method defined in subsections (7), (11), and (14); 5 percent interest for group annuity and pure endowment contracts and 3.5 percent interest for all other such policies and contracts, or in the case of life insurance policies and contracts, other than annuity and pure endowment contracts, issued on or after July 1, 1973, 4 percent interest for such policies issued prior to October 1, 1979, and 4.5 percent interest for such policies issued on or after October 1, 1979; and the following tables:
(a) For all ordinary policies of life insurance issued on the standard basis, excluding any disability and accidental death benefits in such policies:
1. For policies issued before the operative date of s. 627.476(9), the 1958 Commissioners Standard Ordinary (CSO) Mortality Table; except that, for any category of such policies issued on female risks, modified net premiums and present values, referred to in subsection (7), may be calculated according to an age up to 6 years younger than the actual age of the insured.
2. For policies issued on or after the operative date of s. 627.476(9), the 1980 Commissioners Standard Ordinary Mortality Table or, at the election of the insurer for any one or more specified plans of life insurance, the 1980 Commissioners Standard Ordinary Mortality Table with Ten-Year Select Mortality Factors.
3. For policies issued on or after July 1, 2004, ordinary mortality tables, adopted after 1980 by the NAIC, adopted by rule by the commission for use in determining the minimum standard of valuation for such policies.
(b) For all industrial life insurance policies issued on the standard basis, excluding any disability and accidental death benefits in such policies:
1. For policies issued before the first date, the 1961 Commissioners Standard Industrial Mortality Table is applicable according to s. 627.476, the 1941 Standard Industrial Mortality Table;
2. For policies issued on or after that date, the 1961 Commissioners Standard Industrial Mortality Table; and
3. For policies issued on or after October 1, 2014, a Commissioners Standard Industrial Mortality Table adopted by the NAIC after 1980 which is adopted by rule of the commission for use in determining the minimum standard of valuation for such policies.
(c) For individual annuity and pure endowment contracts, excluding any disability and accidental death benefits in such policies, the 1937 Standard Annuity Mortality Table or, at the option of the insurer, the Annuity Mortality Table for 1949, Ultimate, or any modification of these tables approved by the office.
(d) For group annuity and pure endowment contracts, excluding any disability and accidental death benefits in such policies, the Group Annuity Mortality Table for 1951; any modification of such table approved by the office; or, at the option of the insurer, any of the tables or modifications of tables specified for individual annuity and pure endowment contracts.
(e) For total and permanent disability benefits in or supplementary to ordinary policies or contracts:
1. For policies or contracts issued on or after January 1, 1966, the tables of period 2 disablement rates and the 1930 to 1950 termination rates of the 1952 disability study of the Society of Actuaries, with due regard to the type of benefit;
2. For policies or contracts issued on or after January 1, 1961, and before January 1, 1966, either of the tables specified in subparagraph 1. or, at the option of the insurer, the class three disability table (1926);
3. For policies issued before January 1, 1961, the class three disability table (1926); and
4. For policies or contracts issued on or after July 1, 2004, tables of disablement rates and termination rates adopted after 1980 by the NAIC, adopted by rule by the commission for use in determining the minimum standard of valuation for those policies or contracts.
Any such table for active lives shall be combined with a mortality table permitted for calculating the reserves for life insurance policies.
(f) For accidental death benefits in or supplementary to policies:
1. For policies issued on or after January 1, 1966, the 1959 Accidental Death Benefits Table;
2. For policies issued on or after January 1, 1961, and before January 1, 1966, the 1959 Accidental Death Benefits Table or, at the option of the insurer, the Intercompany Double Indemnity Mortality Table;
3. For policies issued before January 1, 1961, the Intercompany Double Indemnity Mortality Table; and
4. For policies issued on or after July 1, 2004, tables of accidental death benefits adopted after 1980 by the NAIC, adopted by rule by the commission for use in determining the minimum standard of valuation for those policies.
Either table shall be combined with a mortality table permitted for calculating the reserves for life insurance policies.
(g) For group life insurance, life insurance issued on the substandard basis, and other special benefits, such tables as may be approved by the office as being sufficient with relation to the benefits provided by such policies.
(h) Except as provided in subsection (6), the minimum standard for the valuation of all individual annuity and pure endowment contracts issued on or after the operative date of this paragraph and for all annuities and pure endowments purchased on or after such operative date under group annuity and pure endowment contracts shall be the commissioners’ reserve valuation method defined in subsection (7) and the following tables and interest rates:
1. For individual annuity and pure endowment contracts issued before October 1, 1979, excluding any disability and accidental death benefits in such contracts, the 1971 Individual Annuity Mortality Table, or any modification of this table approved by the office, and 6 percent interest for single-premium immediate annuity contracts and 4 percent interest for all other individual annuity and pure endowment contracts.
2. For individual single-premium immediate annuity contracts issued on or after October 1, 1979, and before October 1, 1986, excluding any disability and accidental death benefits in such contracts, the 1971 Individual Annuity Mortality Table, or any modification of this table approved by the office, and 7.5 percent interest. For such contracts issued on or after October 1, 1986, the 1983 Individual Annual Mortality Table, or any modification of such table approved by the office, and the applicable calendar year statutory valuation interest rate as described in subsection (6).
3. For individual annuity and pure endowment contracts issued on or after October 1, 1979, and before October 1, 1986, other than single-premium immediate annuity contracts, excluding any disability and accidental death benefits in such contracts, the 1971 Individual Annuity Mortality Table, or any modification of this table approved by the office, and 5.5 percent interest for single-premium deferred annuity and pure endowment contracts and 4.5 percent interest for all other such individual annuity and pure endowment contracts. For such contracts issued on or after October 1, 1986, the 1983 Individual Annual Mortality Table, or any modification of such table approved by the office, and the applicable calendar year statutory valuation interest rate as described in subsection (6).
4. For all annuities and pure endowments purchased before October 1, 1979, under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under such contracts, the 1971 Group Annuity Mortality Table, or any modification of this table approved by the office, and 6 percent interest.
5. For all annuities and pure endowments purchased on or after October 1, 1979, and before October 1, 1986, under group annuity and pure endowment contracts, excluding disability and accidental death benefits purchased under such contracts, the 1971 Group Annuity Mortality Table, or any modification of this table approved by the office, and 7.5 percent interest. For such contracts purchased on or after October 1, 1986, the 1983 Group Annuity Mortality Table, or any modification of such table approved by the office, and the applicable calendar year statutory valuation interest rate as described in subsection (6).
After July 1, 1973, an insurer may have filed with the former Department of Insurance a written notice of its election to comply with this paragraph after a specified date before January 1, 1979, which shall be the operative date of this paragraph for such insurer. However, an insurer may elect a different operative date for individual annuity and pure endowment contracts from that elected for group annuity and pure endowment contracts. If an insurer does not make such election, the operative date of this paragraph for such insurer is January 1, 1979.
(i) In lieu of the mortality tables specified in this subsection, and subject to rules previously adopted by the former Department of Insurance, the insurance company may, at its option:
1. Substitute the applicable 1958 CSO or CET Smoker and Nonsmoker Mortality Tables, in lieu of the 1980 CSO or CET mortality table standard, for policies issued on or after the operative date of s. 627.476(9) and before January 1, 1989.
2. Substitute the applicable 1980 CSO or CET Smoker and Nonsmoker Mortality Tables in lieu of the 1980 CSO or CET mortality table standard.
3. Use the Annuity 2000 Mortality Table for determining the minimum standard of valuation for individual annuity and pure endowment contracts issued on or after January 1, 1998, and before July 1, 1998.
4. Use the 1994 GAR Table for determining the minimum standard of valuation for annuities and pure endowments purchased on or after January 1, 1998, and before July 1, 1998, under group annuity and pure endowment contracts.
(j) The commission may adopt by rule the model regulation for valuation of life insurance policies as approved by the NAIC in March 1999, including tables of select mortality factors, and may make the regulation effective for policies issued on or after January 1, 2000.
(k) For individual annuity and pure endowment contracts issued on or after July 1, 2004, excluding disability and accidental death benefits purchased under those contracts, individual annuity mortality tables adopted after 1980 by the NAIC, adopted by rule by the commission for use in determining the minimum standard of valuation for those contracts.
(l) For all annuities and pure endowments purchased on or after July 1, 2004, under group annuity and pure endowment contracts, excluding disability and accidental death benefits purchased under those contracts, group annuity mortality tables adopted after 1980 by the NAIC, adopted by rule by the commission for use in determining the minimum standard of valuation for those contracts.
(6) MINIMUM STANDARD OF VALUATION.—
(a) The interest rates used in determining the minimum standard for the valuation of:
1. All life insurance policies issued in a particular calendar year on or after the operative date of s. 627.476(9);
2. All individual annuity and pure endowment contracts issued in a particular calendar year on or after January 1, 1982;
3. All annuities and pure endowments purchased in a particular calendar year on or after January 1, 1982, under group annuity and pure endowment contracts; and
4. The net increase, if any, in a particular calendar year after January 1, 1982, in amounts held under guaranteed interest contracts,
shall be the calendar year statutory valuation interest rates for the year-of-issue purchase or increase as defined in this subsection.
(b) The calendar year statutory valuation interest rates I shall be determined as follows, and the results rounded to the nearest 0.25 percent:
1. For life insurance:
I = 0.03 + W(R1–0.03) + (W/2)(R2–0.09).
For purposes of this subparagraph, “R1” is the lesser of R and .09; “R2” is the greater of R and .09; “R” is the reference interest rate defined in this subsection; and “W” is the weighting factor defined in this subsection.
2. For single-premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and from guaranteed interest contracts with cash settlement options:
I = 0.03 + W(R–0.03).
For purposes of this subparagraph, “R” is the reference interest rate defined in this subsection, and “W” is the weighting factor defined in this subsection.
3. For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on an issue-year basis, except as stated in subparagraph 2., the formula for life insurance stated in subparagraph 1. shall apply to annuities and guaranteed interest contracts with guarantee durations in excess of 10 years, and the formula for single-premium immediate annuities stated in subparagraph 2. shall apply to annuities and guaranteed interest contracts with guarantee durations of 10 years or less.
4. For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the formula for single-premium immediate annuities stated in subparagraph 2. shall apply.
5. For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change-in-fund basis, the formula for single-premium immediate annuities stated in subparagraph 2. shall apply.
However, if the calendar year statutory valuation interest rate for any life insurance policies issued in any calendar year determined without reference to this sentence differs from the corresponding actual rate for similar policies issued in the immediately preceding calendar year by less than 0.5 percent, the calendar year statutory valuation interest rate for such life insurance policies shall be equal to the corresponding actual rate for the immediately preceding calendar year. For purposes of applying the immediately preceding sentence, the calendar year statutory valuation interest rate for life insurance policies issued in a calendar year shall be determined for 1980, the reference interest rate defined for 1979 being used, and shall be determined for each subsequent calendar year regardless of when s. 627.476(9) becomes operative.
(c) The weighting factors referred to in the formulas stated in paragraph (b) are given in the following tables:
1. Weighting factors for life insurance:
Guarantee Duration Weighting
(Years) Factors
10 or less:..........0.50
More than 10, but not more than 20:..........0.45
More than 20:..........0.35
For life insurance, the “guarantee duration” is the maximum number of years the life insurance can remain in force on a basis guaranteed in the policy or under options to convert to plans of life insurance with premium rates or nonforfeiture values or both which are guaranteed in the original policy.
2. Weighting factor for single-premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options: 0.80.
3. Weighting factors for other annuities and for guaranteed interest contracts, except as stated in subparagraph 2., shall be as specified in sub-subparagraphs a., b., and c., according to the rules and definitions in sub-subparagraphs d., e., and f. and in paragraph (f):
a. For annuities and guaranteed interest contracts valued on an issue-year basis:
Guarantee Duration Weighting Factor
(Years) for Plan Type
5 or less:..........A—0.80
B—0.60
C—0.50
More than 5, but not more than 10:..........A—0.75
B—0.60
C—0.50
More than 10, but not more than 20:..........A—0.65
B—0.50
C—0.45
More than 20:..........A—0.45
B—0.35
C—0.35
b. For annuities and guaranteed interest contracts valued on a change-in-fund basis, the factors shown in sub-subparagraph a. increased by: 0.15 for Plan Type A; 0.25 for Plan Type B; 0.05 for Plan Type C.
c. For annuities and guaranteed interest contracts valued on an issue-year basis, other than those with no cash settlement options, which do not guarantee interest on considerations received more than 1 year after issue or purchase and for annuities and guaranteed interest contracts valued on a change-in-fund basis which do not guarantee interest rates on considerations received more than 12 months beyond the valuation date, the factors shown in sub-subparagraph a. or derived in sub-subparagraph b. increased by: 0.05 for Plan Type A; 0.05 for Plan Type B; 0.05 for Plan Type C.
d. For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the “guarantee duration” is the number of years for which the contract guarantees interest rates in excess of the calendar year statutory valuation interest rate for life insurance policies with guarantee duration in excess of 20 years. For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the guarantee duration is the number of years from the date of issue or date of purchase to the date annuity benefits are scheduled to commence.
e. “Plan type,” as used in the tables above, is defined as follows:
(I) Plan Type A: At any time, the policyholder may withdraw funds only with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurer; the policyholder may withdraw funds only without such adjustment but in installments over 5 years or more; the policyholder may withdraw funds only as an immediate life annuity; or no withdrawal is permitted.
(II) Plan Type B: Before expiration of the interest rate guarantee, the policyholder may withdraw funds only with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurer; the policyholder may withdraw funds only without such adjustment but in installments over 5 years or more; or no withdrawal is permitted. At the end of interest rate guarantee, funds may be withdrawn without such adjustment in a single sum or installments over less than 5 years.
(III) Plan Type C: The policyholder may withdraw funds before expiration of interest rate guarantee in a single sum or installments over less than 5 years either without adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurer or subject only to a fixed surrender charge stipulated in the contract as a percentage of the fund.
f. An insurer may elect to value guaranteed interest contracts with cash settlement options and annuities with cash settlement options on either an issue-year basis or on a change-in-fund basis. Guaranteed interest contracts with no cash settlement options and other annuities with no cash settlement options must be valued on an issue-year basis.
(d) The “reference interest rate” referred to in paragraph (b) is defined as follows:
1. For all life insurance, the lesser of the average over a period of 36 months and the average over a period of 12 months, ending on June 30 of the calendar year next preceding the year of issue, of the interest rate index.
2. For single-premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the average over a period of 12 months, ending on June 30 of the calendar year of issue or year of purchase, of the interest rate index.
3. For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a year-of-issue basis, except as stated in subparagraph 2., with guarantee duration in excess of 10 years, the lesser of the average over a period of 36 months and the average over a period of 12 months, ending on June 30 of the calendar year of issue or purchase, of the interest rate index.
4. For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a year-of-issue basis, except as stated in subparagraph 2., with guarantee duration of 10 years or less, the average over a period of 12 months, ending on June 30 of the calendar year of issue or purchase, of the interest rate index.
5. For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the average over a period of 12 months, ending on June 30 of the calendar year of issue or purchase, of the interest rate index.
6. For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change-in-fund basis, except as stated in subparagraph 2., the average over a period of 12 months, ending on June 30 of the calendar year of the change in the fund, of the interest rate index.
(e) The interest rate index shall be the Moody’s Corporate Bond Yield Average-Monthly Average Corporates as published by Moody’s Investors Service, Inc., if the index is calculated by using substantially the same methodology used by Moody’s on January 1, 1981. If Moody’s corporate bond yield average ceases to be calculated in substantially the same manner, the interest rate index shall be the index specified in the valuation manual, as applicable, as provided under s. 625.1212, or an index adopted by the NAIC and approved by rule adopted by the commission. The methodology used in determining the index approved by rule must be substantially the same as the methodology employed on January 1, 1981, for determining Moody’s Corporate Bond Yield Average-Monthly Average Corporates as published by Moody’s Investors Service, Inc.
(f) As used in this subsection, an “issue-year basis” of valuation refers to a valuation basis under which the interest rate used to determine the minimum valuation standard for the entire duration of the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of purchase of the annuity or guaranteed interest contract; and the “change-in-fund” basis of valuation refers to a valuation basis under which the interest rate used to determine the minimum valuation standard applicable to each change in the fund held under the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of the change in the fund.
(7) COMMISSIONERS’ RESERVE VALUATION METHOD.—
(a)1. Except as otherwise provided in this subsection and subsections (11) and (14), reserves according to the commissioners’ reserve valuation method, for the life insurance and endowment benefits of policies providing for a uniform amount of insurance and requiring the payment of uniform premiums, shall be the excess, if any, of the present value, at the date of valuation, of such future guaranteed benefits provided for by such policies, over the then-present value of any future modified net premiums therefor. The modified net premiums for any such policy shall be such uniform percentage of the respective contract premiums for such benefits that the present value, at the date of issue of the policy, of all such modified net premiums shall be equal to the sum of the then-present value of such benefits provided for by the policy and the excess of sub-subparagraph a. over sub-subparagraph b. as follows:
a. A net-level annual premium equal to the present value, at the date of issue, of such benefits provided for after the first policy year, divided by the present value, at the date of issue, of an annuity of one per annum payable on the first and each subsequent anniversary of such policy on which a premium falls due; provided, however, that such net-level annual premium shall not exceed the net-level annual premium on the 19-year premium whole life plan for insurance of the same amount at an age 1 year higher than the age at issue of such policy.
b. A net-1-year-term premium for such benefits provided for in the first policy year.
2. For any life insurance policy which is issued on or after January 1, 1985, for which the contract premium in the first policy year exceeds that of the second year and for which no comparable additional benefit is provided in the first year for such excess, and which provides an endowment benefit, a cash surrender value, or a combination thereof in an amount greater than such excess premium, the reserve according to the commissioners’ reserve valuation method as of any policy anniversary occurring on or before the assumed ending date, defined herein as the first policy anniversary on which the sum of any endowment benefit and any cash surrender value then available is greater than such excess premium, shall, except as otherwise provided in subsection (11), be the greater of the reserve as of such policy anniversary calculated as described in subparagraph 1. and the reserve as of such policy anniversary calculated as described in subparagraph 1. but with:
a. The value defined in subparagraph 1. being reduced by 15 percent of the amount of such excess first year premium;
b. All present values of benefits and premiums being determined without reference to premiums or benefits provided for by the policy after the assumed ending date;
c. The policy being assumed to mature on such date as an endowment; and
d. The cash surrender value provided on such date being considered as an endowment benefit.
In making the above comparison, the mortality and interest bases stated in subsections (5) and (6) shall be used.
(b) Reserves according to the commissioners’ reserve valuation method for:
1. Life insurance policies providing for a varying amount of insurance or requiring the payment of varying premiums;
2. Group annuity and pure endowment contracts, purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer, including a partnership or sole proprietorship, or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under s. 408 of the Internal Revenue Code, as now or hereafter amended;
3. Disability and accidental death benefits in all policies and contracts; and
4. All other benefits, except life insurance and endowment benefits in life insurance policies, and benefits provided by all other annuity and pure endowment contracts,
shall be calculated by a method which is consistent with and yields results consistent with the principles of paragraph (a).
(c) This subsection shall apply to all annuity and pure endowment contracts other than group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer, including a partnership or sole proprietorship, or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under s. 408 of the Internal Revenue Code, as now or hereafter amended. Reserves according to the commissioners’ annuity reserve method for benefits under annuity or pure endowment contracts, excluding any disability and accidental death benefits in such contracts, shall be the greatest of the respective excesses of the present values, at the date of valuation, of the future guaranteed benefits, including guaranteed nonforfeiture benefits, provided for by such contracts at the end of each respective contract year, over the present value, at the date of valuation, of any future valuation considerations derived from future gross considerations, required by the terms of such contract, that become payable prior to the end of such respective contract year. The future guaranteed benefits shall be determined by using the mortality table, if any, and the interest rate or rates specified in such contracts for determining guaranteed benefits. The valuation considerations are the portions of the respective gross considerations applied under the terms of such contracts to determine nonforfeiture values.
(8) MINIMUM AGGREGATE RESERVES.—
(a) In no event shall an insurer’s aggregate reserves for all life insurance policies, excluding disability and accidental death benefits, issued on or after the operative date of s. 627.476, be less than the aggregate reserves calculated in accordance with the methods set forth in subsections (7), (11), and (12) and the mortality table or tables and rate or rates of interest used in calculating nonforfeiture benefits for such policies.
(b) In no event may the aggregate reserves for all policies, contracts, and benefits be less than the aggregate reserves determined by the qualified actuary to be necessary to render the opinion required by subsection (3).
(9) OPTIONAL RESERVE BASIS.—
(a) Reserves for all policies and contracts issued prior to the operative date of s. 627.476 may be calculated, at the option of the insurer, according to any standards which produce greater aggregate reserves for all such policies and contracts than the minimum reserves required by the laws in effect immediately prior to such date.
(b) For any category of policies, contracts, or benefits specified in subsections (5) and (6), issued on or after the operative date of s. 627.476 (the Standard Nonforfeiture Law for Life Insurance), reserves may be calculated, at the option of the insurer, according to any standard or standards which produce greater aggregate reserves for such category than those calculated according to the minimum standard herein provided; but the rate or rates of interest used for policies and contracts, other than annuity and pure endowment contracts, shall not be higher than the corresponding rate or rates of interest used in calculating any nonforfeiture benefits provided for therein.
(10) LOWER VALUATIONS.—An insurer that adopted a standard of valuation producing greater aggregate reserves than those calculated according to the minimum standard provided under this section shall, with the approval of the office, adopt a lower standard of valuation, but not lower than the minimum herein provided; however, for the purposes of this subsection, the holding of additional reserves previously determined by an appointed actuary, as defined in s. 625.1212(2), to be necessary to render the opinion required by subsection (3) may not be deemed to be the adoption of a higher standard of valuation.
(11) ADDITIONAL PREMIUM.—If in any contract year the gross premium charged by a life insurer on a policy or contract is less than the valuation net premium for the policy or contract calculated by the method used in calculating the reserve thereon but using the minimum valuation standards of mortality and rate of interest, the minimum premium reserve required for the policy or contract shall be the greater of the reserve calculated according to the actual mortality table, rate of interest, and method used for the policy or contract, or the actual method used for the policy or contract but using the minimum valuation standards of mortality and rate of interest and replacing the valuation net premium by the actual gross premium in each contract year for which the valuation net premium exceeds the actual gross premium. The minimum valuation standards of mortality and rate of interest are those standards defined by subsections (4), (5), and (6). For any life insurance policy that is issued on or after January 1, 1985, for which the gross premium in the first policy year exceeds that of the second year and for which no comparable additional benefit is provided in the first year for such excess, and which provides an endowment benefit, a cash surrender value, or a combination thereof in an amount greater than such excess premium, the foregoing provisions of this subsection shall be applied as if the method actually used in calculating the reserve for such policy were the method described in subsection (7), the provisions of subparagraph (7)(a)2. being ignored. The minimum premium reserve amount, if any, at each policy anniversary of such a policy is the excess, if any, of the amount determined by the foregoing provisions of this subsection plus the reserve calculated by the method described in subsection (7), the provisions of subparagraph (7)(a)2. being ignored, over the reserve actually calculated by the method described in subsection (7), the provisions of subparagraph (7)(a)2. being taken into account.
(12) RESERVE CALCULATION FOR INDETERMINATE PREMIUM PLANS.—In the case of a plan of life insurance which provides for future premium determination, the amounts of which are to be determined by the insurer based on then estimates of future experience, or in the case of a plan of life insurance or annuity for which the minimum reserves cannot be determined by the methods described in subsections (7) and (11), the reserves that are held under such plan must:
(a) Be appropriate in relation to the benefits and the pattern of premiums for that plan; and
(b) Be computed by a method that is consistent with the principles of this section, as determined by rules adopted by the commission.
(13) CREDIT LIFE AND DISABILITY POLICIES.—
(a) For policies issued prior to January 1, 2004:
1. The minimum reserve for single-premium credit disability insurance, monthly premium credit life insurance, and monthly premium credit disability insurance shall be the unearned gross premium.
2. As to single-premium credit life insurance policies, the insurer shall establish and maintain reserves that are not less than the value, at the valuation date, of the risk for the unexpired portion of the period for which the premium has been paid as computed on the basis of the commissioners’ 1980 Standard Ordinary Mortality Table and 3.5 percent interest. At the discretion of the office, the insurer may make a reasonable assumption as to the ages at which net premiums are to be determined. In lieu of the foregoing basis, reserves based upon unearned gross premiums may be used at the option of the insurer.
(b) For policies issued on or after January 1, 2004:
1. The minimum reserve for single-premium credit disability insurance shall be either:
a. The unearned gross premium, or
b. Based upon a morbidity table that is adopted by the National Association of Insurance Commissioners and is specified in a rule the commission adopts pursuant to subsection (14).
2. The minimum reserve for monthly premium credit disability insurance shall be the unearned gross premium.
3. The minimum reserve for monthly premium credit life insurance shall be the unearned gross premium.
4. As to single-premium credit life insurance policies, the insurer shall establish and maintain reserves that are not less than the value, at the valuation date, of the risk for the unexpired portion of the period for which the premium has been paid as computed on the basis of the commissioners’ 1980 Standard Ordinary Mortality Table or any ordinary mortality table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by rule adopted by the commission for use in determining the minimum standard of valuation for such policies; and an interest rate determined in accordance with subsection (6). At the discretion of the office, the insurer may make a reasonable assumption as to the ages at which net premiums are to be determined. In lieu of the foregoing basis, reserves based upon unearned gross premiums may be used at the option of the insurer.
(14) MINIMUM STANDARDS FOR HEALTH PLANS.—The commission shall adopt a rule containing the minimum standards applicable to the valuation of health plans in accordance with sound actuarial principles.
History.—s. 120, ch. 59-205; ss. 1, 2, ch. 61-106; s. 17, ch. 63-400; s. 1, ch. 65-11; ss. 13, 35, ch. 69-106; ss. 1, 2, ch. 73-324; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 1, 3, ch. 79-356; ss. 1, 6, ch. 81-289; ss. 2, 3, ch. 81-318; ss. 98, 809(1st), 810, ch. 82-243; ss. 48, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 1, ch. 93-118; s. 21, ch. 95-211; s. 369, ch. 96-406; s. 8, ch. 97-292; s. 2, ch. 2000-365; s. 873, ch. 2003-261; s. 7, ch. 2004-370; s. 152, ch. 2004-390; s. 6, ch. 2014-101.
625.1212 Valuation of policies and contracts issued on or after the operative date of the valuation manual.—
(1) APPLICABILITY.—This section applies to life insurance contracts, accident and health insurance contracts, and deposit-type contracts issued on or after the operative date of the valuation manual unless the manual requires or permits an insurer to determine reserves according to the standards in effect before the operative date of the manual and rules adopted by the commission as provided under s. 625.121. Subsections (5) and (6) do not apply to policies and contracts subject to s. 625.121.
(2) DEFINITIONS.—As used in this section, the term:
(a) “Accident and health insurance” means contracts that incorporate morbidity risk and provide protection against economic loss resulting from accident, sickness, or medical conditions and as may be specified in the valuation manual.
(b) “Appointed actuary” means a qualified actuary who is appointed in accordance with the valuation manual to prepare the actuarial opinion required in subsection (4).
(c) “Deposit-type contract” means contracts that do not incorporate mortality or morbidity risks and as may be specified in the valuation manual.
(d) “Insurer” means a person engaged as an indemnitor, surety, or contractor in the business of entering into contracts of insurance or reinsurance.
(e) “Life insurance” means policies or contracts that incorporate mortality risk, including annuity and pure endowment contracts, and as may be specified in the valuation manual.
(f) “Operative date of the valuation manual” means the later of January 1, 2017, or the January 1 immediately following the July 1 that the Commissioner of the Office of Insurance Regulation certifies to the Financial Services Commission in writing that the following conditions occurred on or before July 1:
1. The valuation manual is adopted by the NAIC by an affirmative vote of at least 42 members of the NAIC or 75 percent of members voting, whichever is greater;
2. The Standard Valuation Law, as amended by the NAIC in 2009, or substantially similar legislation, is enacted in states representing more than 75 percent of the direct premiums written as reported in the 2008 annual statements for life, accident and health, health, or fraternal society insurance; and
3. The Standard Valuation Law as amended by the NAIC in 2009, or substantially similar legislation, is enacted in at least 42 of the following 55 jurisdictions: the 50 states of the United States, the District of Columbia, American Samoa, the American Virgin Islands, Guam, and Puerto Rico.
(g) “Policyholder behavior” means an action a policyholder, contract holder, or other person who has the right to elect options, such as a certificateholder, may take under a policy or contract subject to this section including, but not limited to, lapse, withdrawal, transfer, deposit, premium payment, loan, annuitization, or benefit elections prescribed by the policy or contract but excluding events of mortality or morbidity that result in benefits prescribed in their essential aspects by the terms of the policy or contract.
(h) “Principle-based valuation” means a reserve valuation that uses one or more methods or assumptions determined by the insurer and must comply with subsection (6) as specified in the valuation manual.
(i) “Qualified actuary” means an individual who is qualified to sign the applicable statement of actuarial opinion in accordance with the American Academy of Actuaries qualification standards for actuaries signing such statements and who meets the requirements specified in the valuation manual.
(j) “Tail risk” means a risk that occurs when the frequency of low probability events is higher than expected under a normal probability distribution or when there are observed events of very significant size or magnitude.
(k) “Valuation manual” means the manual of valuation instructions adopted by the NAIC, or as subsequently amended.
(3) RESERVE VALUATION.—The office shall annually value, or cause to be valued, insurer reserves for all outstanding life insurance contracts, accident and health contracts, and deposit-type contracts in this state. Insurers are subject to subsections (5) and (6) when calculating the reserves. In lieu of the reserve valuation for a foreign or alien insurer, the office may accept a valuation made, or caused to be made, by the insurance supervisory official of any state or other jurisdiction if the valuation complies with the minimum standard required in this section.
(4) ACTUARIAL OPINION OF RESERVES.—
(a) Each insurer that has outstanding life insurance contracts, accident and health insurance contracts, or deposit-type contracts in this state which are subject to regulation by the office must annually submit the opinion of a qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts are computed appropriately, are based on assumptions that satisfy contractual provisions, are consistent with prior reported amounts, and comply with applicable state law. The specifics of the opinion, including any items deemed necessary to its scope, must be as prescribed by the valuation manual.
(b) Except as exempted in the valuation manual, each insurer that has outstanding life insurance contracts, accident and health insurance contracts, or deposit-type contracts in this state shall also annually include an opinion by the same appointed actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified in the valuation manual, when considered in light of the assets held by the insurer with respect to the reserves and related actuarial items, including, but not limited to, the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the insurer’s obligations under the policies and contracts, including, but not limited to, the benefits under and expenses associated with the policies and contracts.
(c) The insurer shall prepare a memorandum to support each actuarial opinion in such form and substance as specified in the valuation manual and acceptable to the office. If the insurer fails to provide a supporting memorandum within the period specified in the valuation manual, or if the office determines that the supporting memorandum fails to meet the standards required by the manual or is otherwise unacceptable to the office, the office may engage a qualified actuary at the expense of the insurer to review the opinion and the basis for the opinion and to prepare the supporting memorandum.
(d) Each opinion subject to this subsection must be submitted with the annual statement in such form and substance as specified in the valuation manual and acceptable to the office, must reflect the valuation of the reserve liabilities for each year ending on or after the operative date of the valuation manual, and must apply to all policies and contracts subject to paragraph (b), plus other actuarial liabilities as may be specified in the valuation manual. The opinion must be based on standards adopted by the Actuarial Standards Board or its successor, and on such additional standards as may be prescribed in the valuation manual. For a foreign or alien insurer, the office may accept an opinion filed by the insurer with the insurance supervisory official of another state if the office determines that the opinion reasonably meets the requirements applicable to an insurer domiciled in this state.
(e) Disciplinary action by the office against the insurer or the appointed actuary shall be in accordance with the laws of this state and related rules adopted by the commission.
(5) MINIMUM STANDARD OF VALUATION.—
(a) In accordance with this subsection and subsection (6), an insurer must apply the standard prescribed in the valuation manual as the minimum standard of valuation for contracts issued on or after the operative date of the valuation manual, except:
1. For specific product forms or product lines exempted pursuant to paragraph (f); or
2. That an insurer domiciled in a state that does not require the insurer to apply the standards prescribed in the valuation manual as the minimum standard of valuation, including the principle-based valuation of reserves, may not apply such standards in this state.
(b) If, in the opinion of the office, there is no specific valuation requirement or a specific valuation requirement in the valuation manual is not in compliance with this section, the insurer shall comply with the minimum valuation standards prescribed by the commission by rule.
(c) The office may engage a qualified actuary, at the insurer’s expense, to perform an actuarial examination of the insurer and to render an opinion as to the appropriateness of any reserve assumption or method, or computer model or modeling software used by the insurer, or to review and provide an opinion on the insurer’s compliance with the requirements of this section. In calculating and establishing reserves under this section, the insurer may rely on the modeling software and tools of a third-party vendor only if the vendor contractually agrees to allow the insurer to provide the office with access to the software or tools as necessary to replicate the results of the software or tools for the purpose of evaluating and validating reserve valuations. The office may rely upon the opinion of a qualified actuary employed by or under contract with the commissioner of another state, district, or territory of the United States with respect to this section.
(d) The office may require an insurer to change any assumption or method that, in the opinion of the office, is necessary to comply with the valuation manual or this section. The insurer shall adjust the reserves as required by the office. The office may take other disciplinary action pursuant to applicable state law and rules.
(e) The commission may adopt subsequent amendments to the valuation manual by rule if the methodology and standards remain substantially consistent with the valuation manual then in effect.
(f) A domestic insurer licensed and doing business only in this state may exempt specific product forms or product lines from the requirements of this subsection and subsection (6) if the insurer computes reserves for the specific product forms or product lines using assumptions and methods used before the operative date of the valuation manual, and the amount of insurance subject to the stochastic or deterministic reserve requirement is immaterial. The requirements of s. 625.121 apply to specific product forms and product lines exempted under this paragraph.
(g) An insurer that adopted a standard of valuation producing greater aggregate reserves than those calculated according to the minimum standard provided under this section may, with the approval of the office, adopt a lower standard of valuation, but such standard may not be lower than the minimum provided in this subsection. For purposes of this subsection, holding additional reserves previously determined by an appointed actuary to be necessary to render the opinion required by subsection (4) may not be deemed to be the adoption of a higher standard of valuation.
(6) REQUIREMENTS OF A PRINCIPLE-BASED VALUATION OF RESERVES.—
(a) Insurers required to use a principle-based valuation of reserves for specified product forms and product lines and associated policies and contracts, pursuant to subparagraph (5)(a)2., must:
1. Quantify the benefits and guarantees, and the funding associated with the policies or contracts and their risks at a level of conservatism that reflects conditions that:
a. Include unfavorable events that have a reasonable probability of occurring during the lifetime of the policies or contracts; and
b. Are appropriately adverse to quantifying the tail risk.
2. Incorporate assumptions, risk analysis methods, and financial models and management techniques that are consistent with, but not necessarily identical to, those used within the insurer’s overall risk assessment process while recognizing potential differences in financial reporting structures and any prescribed assumptions or methods.
3. Incorporate assumptions that are derived in one of the following manners:
a. The assumption is prescribed in the valuation manual.
b. For assumptions that are not prescribed, the assumptions must:
(I) Be established using the insurer’s available experience, to the extent that it is relevant and statistically credible; or
(II) To the extent that insurer data is not available, relevant, or statistically credible, be established using other relevant, statistically credible experience.
4. Provide margins for uncertainty including adverse deviation and estimation error, such that the greater the uncertainty the larger the margin and resulting reserve.
(b) An insurer using a principle-based valuation for one or more policies or contracts subject to this section as specified in the valuation manual shall:
1. Establish procedures for corporate governance and oversight of the actuarial valuation function consistent with those prescribed in the valuation manual.
2. Submit an annual certification to the office and the insurer’s board of directors of the effectiveness of internal controls on the principle-based valuation. The internal controls must be designed to assure that all material risks inherent in the liabilities and associated assets subject to the valuation are included in the valuation, and that valuations are made in accordance with the valuation manual. The certification must be based on controls in place as of the end of the preceding calendar year.
3. Upon request, develop and file with the office a principle-based valuation report that complies with standards prescribed in the valuation manual.
(c) A principle-based valuation may include a prescribed formulaic reserve component.
(7) EXPERIENCE REPORTING.—An insurer subject to the requirements of paragraph (5)(d) shall submit mortality, morbidity, policyholder behavior, or expense experience and other data as prescribed in the valuation manual to the office.
(8) RULE ADOPTION.—The commission may adopt rules as necessary to administer this section, including rules requiring the use of the NAIC 2009 Standard Valuation Law and the NAIC 2012 Valuation Manual. The adoption of such rules is not subject to s. 120.541(3), and the rules do not take effect until the operative date of the valuation manual.
History.—s. 7, ch. 2014-101; s. 76, ch. 2015-2.
625.1214 Use of confidential information.—
(1) Documents, reports, materials, and other information created, produced, or obtained pursuant to ss. 625.121 and 625.1212 are privileged, confidential, and exempt as provided in s. 624.4212, and are not subject to subpoena or discovery directly from the office. However, the department or office may use the confidential and exempt information in the furtherance of any regulatory or legal action brought against an insurer as a part of the official duties of the department or office. A waiver of any other applicable claim of confidentiality or privilege may not occur as a result of a disclosure to the office under this section, any other section of the insurance code, or as a result of sharing under s. 624.4212.
(2) Neither the office nor any person who received confidential and exempt information while acting under the authority of the office or with whom such information is shared pursuant to s. 624.4212 may be permitted or required to testify in a private civil action concerning any confidential and exempt information subject to s. 624.4212. If any portion of the confidential memorandum is cited by the insurer in its marketing, is cited before a governmental agency other than a state insurance department, or is released by the insurer to the news media, no portion of the memorandum is confidential.
(3) A privilege established under the law of any state or jurisdiction that is substantially similar to the privilege established under subsection (1) shall be available and enforced in any proceeding in and in any court of this state.
History.—s. 8, ch. 2014-101.
625.141 Valuation of bonds.—
(1) All bonds or other evidences of debt having a fixed term and rate of interest held by an insurer may, if amply secured and not in default as to principal or interest, be valued as follows:
(a) If purchased at par, at the par value.
(b) If purchased above or below par, on the basis of the purchase price adjusted so as to bring the value to par at maturity and so as to yield in the meantime the effective rate of interest at which the purchase was made, or in lieu of such method, according to such accepted method of valuation as is approved by the commission.
(c) Purchase price shall in no case be taken at a higher figure than the actual market value at the time of purchase, plus actual brokerage, transfer, postage, or express charges paid in the acquisition of such securities.
(2) The office shall have full discretion in determining the method of calculating values according to the rules set forth in this section, but no such method or valuation shall be inconsistent with the method formulated or approved by the National Association of Insurance Commissioners or its successor organization and set forth in the latest edition of its publication “Valuation of Securities”; provided that such valuation methodology is substantially similar to the methodology used by the National Association of Insurance Commissioners in its July 1, 2002, edition of such publication. Amortization of bond premium or discount must be calculated using the scientific (constant yield) interest method taking into consideration specified interest and principal provisions over the life of the bond. Bonds containing call provisions shall be amortized to the call or maturity value or date that produces the lowest asset value.
History.—s. 122, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 95, 98, 809(1st), ch. 82-243; s. 42, ch. 89-360; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 18, ch. 2001-213; s. 875, ch. 2003-261.
625.151 Valuation of other securities.—
(1) Securities, other than those referred to in s. 625.141, held by an insurer shall be valued, in the discretion of the office, at their market value, or at their appraised value, or at prices determined by it as representing their fair market value.
(2) Preferred or guaranteed stocks or shares while paying full dividends may be carried at a fixed value in lieu of market value, at the discretion of the office and in accordance with such method of valuation as it may approve.
(3) Stock of a subsidiary corporation of an insurer may not be valued at an amount in excess of the net value thereof as based upon those assets only of the subsidiary which would be eligible under part II for investment of the funds of the insurer directly.
(a) If the surplus as to policyholders of an insurer including investments in subsidiaries does not exceed $100 million, investments in subsidiaries and related corporations as defined in s. 625.325, including common stock, preferred stock, debt obligations, other securities, and loans to such corporations, shall be valued in an amount which in the aggregate does not exceed the lesser of:
1. Ten percent of the insurer’s admitted assets; or
2. Fifty percent of the insurer’s surplus as to policyholders in excess of the minimum surplus as to policyholders required under this code.
(b) If the surplus as to policyholders of an insurer including investments in subsidiaries is $100 million or more, investments in subsidiaries and related corporations as defined in s. 625.325, including common stock, preferred stock, debt obligations, other securities, and loans to such corporations, shall be valued in an amount which in the aggregate does not exceed 25 percent of the insurer’s admitted assets.
(c) This subsection does not apply to stock of a subsidiary corporation or related entities of a foreign insurer that is permissible under the laws of its state of domicile if the state of domicile is a member of the National Association of Insurance Commissioners.
(4) No valuations under this section shall be inconsistent with any applicable valuation or method contained in the latest edition of the publication “Valuation of Securities” published by the National Association of Insurance Commissioners or its successor organization; provided that such valuation methodology is substantially similar to the methodology used by the National Association of Insurance Commissioners in its July 1, 2002, edition of such publication.
History.—s. 123, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 96, 98, 809(1st), ch. 82-243; s. 43, ch. 89-360; s. 6, ch. 90-119; ss. 49, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 876, ch. 2003-261; s. 1, ch. 2018-131.
625.161 Valuation of property.—
(1) Real property owned by an insurer which is reported in financial statements filed with the office shall be valued at the lower of depreciated cost or fair market value.
(2) Real property acquired pursuant to a mortgage loan or contract for sale, in the absence of a recent appraisal deemed by the office to be reliable, shall not be valued at an amount greater than the unpaid principal and accrued interest of the defaulted loan or contract at the date of such acquisition, together with any taxes and expenses paid or incurred in connection with such acquisition, and the cost of improvements thereafter made by the insurer and any amounts thereafter paid by the insurer on assessments levied for improvements in connection with the property.
(3) Other real property held by an insurer shall not be valued at an amount in excess of fair value as determined by recent appraisal. If the valuation of real property is based on an appraisal more than 5 years old, the office may, at its discretion, call for and require a new appraisal in order to determine fair market value.
(4) Personal property acquired pursuant to chattel mortgages made in accordance with s. 625.329 shall not be valued at an amount greater than the unpaid balance of principal and accrued interest on the defaulted loan at the date of acquisition, together with taxes and expenses incurred in connection with such acquisition, or the fair value of such property, whichever amount is the lesser.
(5) In carrying out its responsibilities under this section, in the event that the office and the insurer do not agree on the value of real or personal property of such insurer, the office may retain the services of a qualified real or personal property appraiser. In the event it is subsequently determined that the insurer has overvalued assets, the office shall be reimbursed for the costs of the services of any such appraiser incurred with respect to its responsibilities under this section regarding an insurer by said insurer and any reimbursement shall be deposited in the Insurance Regulatory Trust Fund.
(6) Any insurer that reported real estate with a value in excess of that allowed by subsection (1) shall comply with the requirements of that subsection.
History.—s. 124, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 98, 809(1st), ch. 82-243; s. 44, ch. 89-360; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 19, ch. 2001-213; s. 877, ch. 2003-261; s. 142, ch. 2020-2.
625.171 Valuation of purchase money mortgages.—Purchase money mortgages on real property referred to in s. 625.161(2) shall be valued in an amount not exceeding the acquisition cost to the insurer of real property covered thereby or 90 percent of the fair value of such real property, whichever is less.
History.—s. 125, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 98, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 90, ch. 2002-1.
625.172 Replacing certain assets; reporting certain liabilities.—
(1) The office, upon determining that an insurer’s asset has not been evaluated according to applicable law or that it does not qualify as an asset, shall require the insurer to properly reevaluate the asset or replace the asset with an asset suitable to the office.
(2) The office, upon determining that an insurer has failed to report certain liabilities that should have been reported, shall require that the insurer report such liabilities to the office within 90 days.
(3) If it is determined that the proper valuation of an asset or the establishment of certain liabilities would place the insurer in financial impairment or insolvency, the office may, at its discretion, immediately suspend the certificate of authority of an insurer or take other action it deems appropriate to protect the interests of policyholders or the general public.
History.—s. 1, ch. 70-122; s. 1, ch. 70-439; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 97, 98, 809(1st), ch. 82-243; s. 2, ch. 90-248; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 878, ch. 2003-261.
625.181 Assets received as capital or surplus contributions.—Assets received by an insurer as a capital or surplus contribution shall, for purposes of this code, be deemed to be purchased by the insurer at a cost equal to, in the discretion of the office, their market value, their appraised value, or prices determined by the office as representing their fair market value. Assets so acquired shall be valued in accordance with the appropriate sections of this code as if the insurer had purchased such assets directly.
History.—ss. 7, 21, ch. 90-119; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 879, ch. 2003-261.
PART II
INVESTMENTS625.301 Scope of part.
625.302 Eligible investments.
625.303 General qualifications.
625.304 Authorization of investment.
625.305 Diversification.
625.306 Cash and deposits.
625.307 United States Government obligations.
625.308 Loans guaranteed by the United States.
625.309 State and Canadian public obligations.
625.310 County, municipal, and district obligations.
625.311 Public improvement bonds.
625.312 Public utility obligations.
625.313 Securities of certain agencies.
625.314 Public housing obligations.
625.315 Obligations of State Board of Education.
625.316 International development banks.
625.317 Corporate bonds and debentures.
625.318 Religious institution obligations.
625.319 Equipment trust certificates.
625.320 Building and loan or savings and loan association accounts.
625.321 Policy loans.
625.322 Collateral loans.
625.323 Ship loans.
625.324 Corporate stocks.
625.325 Investments in subsidiaries and related corporations.
625.3255 Capital participation instrument.
625.326 Foreign investments.
625.3262 State of Israel obligations.
625.327 Mortgage loans.
625.329 Chattel mortgages.
625.330 Special investments by title insurer.
625.331 Special consent investments.
625.332 Prohibited investments and investment underwriting.
625.333 Real estate, in general.
625.338 Time limit for disposal of ineligible property and securities; effect of failure to dispose.
625.340 Investments of foreign or alien insurers.
625.301 Scope of part.—Except as to s. 625.340, this part of this chapter shall apply only to domestic insurers and commercially domiciled insurers.
History.—s. 126, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 122, 809(1st), ch. 82-243; s. 2, ch. 85-214; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.
625.302 Eligible investments.—
(1) Insurers shall invest in or lend their funds on the security of, and shall hold as invested assets, only eligible investments as prescribed in this part of this chapter.
(2) Any particular investment held by an insurer on the effective date of this code, and which was a legal investment at the time it was made, and which the insurer was legally entitled to possess immediately prior to such effective date, shall be deemed to be an eligible investment.
(3) Eligibility of an investment shall be determined as of the date of its making or acquisition, except as stated in subsection (2).
(4) Any investment limitation based upon the amount of the insurer’s assets or particular funds shall relate to such assets or funds as shown by the insurer’s annual statement as of December 31 next preceding date of acquisition of the investment by the insurer, or as shown by a current financial statement of the insurer.
History.—s. 127, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 122, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.
625.303 General qualifications.—
(1) No security or investment (other than real property and personal property acquired under s. 625.333) shall be eligible for acquisition unless it is interest-bearing or interest-accruing, is entitled to receive dividends if and when declared and paid or is otherwise income-producing, is not then in default in any respect, and the insurer is entitled to receive for its exclusive account and benefit the interest or income accruing thereon.
(2) No security or investment shall be eligible for purchase at a price above its market value unless it is approved by the office and is made in accordance with valuation procedures of the National Association of Insurance Commissioners which have been adopted by the commission.
(3) No provision of this part shall prohibit the acquisition by an insurer of other or additional securities or property if received as a dividend, as a lawful distribution of assets, or under a lawful and bona fide agreement of bulk reinsurance, merger, or consolidation. Any investment so acquired which is not otherwise eligible under this part shall be disposed of pursuant to s. 625.338 if property or securities.
History.—s. 128, ch. 59-205; s. 1, ch. 70-188; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 99, 122, 809(1st), ch. 82-243; s. 10, ch. 82-386; s. 80, ch. 83-216; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 880, ch. 2003-261.
625.304 Authorization of investment.—An insurer shall not make any investment or loan, other than a policy loan or annuity contract loan of a life insurer, unless the same is authorized or approved by the insurer’s board of directors or by a committee authorized by such board and charged with the supervision or making of such investment or loan. The minutes of any such committee shall be recorded and regular reports of such committee shall be submitted to the board of directors.
History.—s. 129, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 100, 122, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.
625.305 Diversification.—
(1) Every insurer must maintain an amount equal to its entire reserve, as required under part I of this chapter, and the minimum surplus as to policyholders required to be maintained by the insurer under this code invested in coin or currency of the United States, in assets allowed by s. 625.012, except loans or advances to affiliates to the extent unsecured and in investments as authorized under this part, other than the investments authorized under either of the following sections:
(a) Section 625.331.
(b) Section 625.333, except paragraph (1)(a).
(2) Investments eligible under subsection (1), except investments acquired pursuant to s. 625.331, are subject to the following limitations:
(a) The cost of investments made by insurers in stock authorized by s. 625.324 shall not exceed 15 percent of the insurer’s admitted assets; the cost of such investment in common stocks shall not exceed 10 percent of the insurer’s admitted assets; and the cost of such investment in stock of any one corporation shall not exceed 3 percent of the insurer’s admitted assets. Notwithstanding any other provision in this chapter, the cost basis or market value, if lower, of all stock investment shall be used for the purpose of determining the asset value against which such percentage limitations are to be applied.
(b) Such other limitations, if any, as may be expressly provided for in the section under which the investment is authorized.
(3) The cost of investments made by insurers in a mortgage loan authorized by s. 625.327 shall not exceed the lesser of 5 percent of the insurer’s admitted assets or 10 percent of the insurer’s capital and surplus. An insurer shall not invest in additional mortgage loans without the consent of the office if the admitted value of all mortgage loans held by the insurer exceeds:
(a) With respect to life and health insurers, 40 percent of the admitted assets of the insurer.
(b) With respect to property and casualty insurers, 10 percent of the admitted assets of the insurer.
(4) The cost of investments in bonds, debentures, notes, commercial paper, or other debt obligations issued, assumed, or guaranteed by any solvent institution, which investments are classified as medium to lower quality obligations, other than obligations of subsidiaries or related corporations as that term is defined in s. 625.325, shall be limited to:
(a) No more than 13 percent of an insurer’s admitted assets.
(b) No more than 5 percent of an insurer’s admitted assets in obligations that have been given a rating of 4, 5, or 6 by the Securities Valuation Office of the National Association of Insurance Commissioners.
(c) No more than 1.5 percent of an insurer’s admitted assets in obligations that have been given a rating of 5 or 6 by the Securities Valuation Office of the National Association of Insurance Commissioners.
(d) No more than 0.5 percent of an insurer’s admitted assets in obligations that have been given a rating of 6 by the Securities Valuation Office of the National Association of Insurance Commissioners.
(e) No more than 10 percent of an insurer’s admitted assets, if the investments are in issuers from any one industry.
(f) No more than 2 percent of an insurer’s admitted assets if the investment is in any one issuer.
(5) For purposes of subsection (4), the following definitions shall apply:
(a) “Medium to lower quality obligations” means obligations that have been given a rating of 3, 4, 5, or 6 by the Securities Valuation Office of the National Association of Insurance Commissioners.
(b) “Industry” means a distinct and recognized area of economic activity that consists of the production, manufacture, or distribution of common goods, products, commodities, or services.
(6) Each insurer shall possess and maintain adequate documentation to establish that its investments in medium to lower quality obligations do not exceed the limitations under subsection (4).
(7) Any investments in excess of those permitted by subsection (4) are not allowed as an asset of the insurer.
(8) The office may limit the extent of an insurer’s deposits with any financial institution which does not meet its regulatory capital requirement if the office determines that the financial solvency of the insurer is threatened by a deposit in excess of such limit.
(9) The provisions of this section supersede any inconsistent provision of s. 106 of the Secondary Mortgage Market Enhancement Act of 1984 (15 U.S.C. s. 77r).
(10) Every domestic life insurance company that issues variable annuity contracts may invest and reinvest amounts received in connection with such variable contracts in common stocks, subject to the following limitations:
(a) All common stock investments must be in stock that is listed or admitted to trading on a securities exchange located in the United States, or which is publicly held and has been traded in the “over the counter market” for not less than 1 year preceding the date of purchase and for which stock market quotations have been readily available for that 1 year period.
(b) A domestic life insurance company that issues variable annuity contracts may not invest more than 5 percent of all of the amounts received in connection with such contracts in the securities of one corporation or insurer.
(c) A domestic life insurance company that issues variable annuity contracts may not, as a result of investing any funds received in connection with such contracts, beneficially own or hold, together with the investments permitted under paragraph (2)(a), more than 15 percent of the outstanding securities of any corporation or issuer. Any foreign life insurance company that issues variable annuity contracts in this state and which invests the funds received in connection with such contracts in accordance with the laws of its state of domicile, is in compliance with this section.
(d) A domestic life insurance company may not invest in the common stock of any corporation if such investment creates a conflict of interest between officers and directors of the investing company and those of the corporation whose stock is purchased.
History.—s. 130, ch. 59-205; s. 2, ch. 70-188; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 1, 2, ch. 79-245; ss. 2, 3, ch. 81-318; ss. 101, 122, 809(1st), ch. 82-243; s. 2, ch. 87-250; s. 1, ch. 89-227; s. 45, ch. 89-360; ss. 50, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 10, ch. 93-410; s. 4, ch. 2000-370; s. 881, ch. 2003-261.
625.306 Cash and deposits.—An insurer may have funds in coin or currency of the United States on hand or on deposit in any solvent national or state bank, savings and loan association, or trust company.
History.—s. 131, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 102, 122, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.
625.307 United States Government obligations.—An insurer may invest in bonds, notes, warrants, and other evidences of indebtedness which are direct obligations of the Government of the United States or for which the full faith and credit of the Government of the United States is pledged for the payment of principal and interest.
History.—s. 132, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 122, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.
625.308 Loans guaranteed by the United States.—
(1) An insurer may invest in loans insured or guaranteed as to principal and interest by the Government of the United States, or by any agency or instrumentality of the Government of the United States, to the extent of such insurance or guaranty.
(2) An insurer may invest in student loans insured or guaranteed as to principal by the Government of the United States, or by any agency or instrumentality of the Government of the United States, to the extent of such insurance or guaranty.
History.—s. 133, ch. 59-205; s. 1, ch. 74-43; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 122, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.
625.309 State and Canadian public obligations.—An insurer may invest in bonds, notes, warrants, and other securities not in default which are the direct obligations of any state of the United States or of the District of Columbia, or of the Government of Canada or any province thereof, or for which the full faith and credit of such state, district, government, or province has been pledged for the payment of principal and interest.
History.—s. 134, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 122, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.
625.310 County, municipal, and district obligations.—An insurer may invest in bonds, notes, warrants, and other securities not in default of any county, district, incorporated city, or school district in any state of the United States, or the District of Columbia, or in any province of Canada, which are the direct obligations of such county, district, city, or school district and for payment of the principal and interest of which the county, district, city, or school district has lawful authority to levy taxes or make assessments.
History.—s. 135, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 122, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.
625.311 Public improvement bonds.—An insurer may invest in bonds, notes, certificates of indebtedness, warrants, or other evidences of indebtedness which are payable from revenues or earnings specifically pledged therefor of any public toll bridge, structure, or improvement owned by any state, incorporated city, or legally constituted public corporation or commission, all within the United States or Canada, for the payment of the principal and interest of which a lawful sinking fund has been established and is being maintained and if no default on the part of the issuer in payment of principal or interest has occurred on any of its bonds, notes, warrants, or other securities within 5 years prior to the date of investment therein.
History.—s. 136, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 103, 122, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.
625.312 Public utility obligations.—An insurer may invest in the bonds, notes, certificates of indebtedness, warrants, or other evidences of indebtedness which are valid obligations issued, assumed, or guaranteed by the United States or any state thereof or by any county, municipal corporation, district, political subdivision, civil division, or public instrumentality of any such government or unit thereof, or in any province of Canada, if by statute or other legal requirements such obligations are payable as to both principal and interest from revenues or earnings from the whole or any part of any utility supplying water, gas, a sewage disposal facility, electricity, or any other public service, including but not limited to a toll road or toll bridge.
History.—s. 137, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 104, 122, 809(1st), ch. 82-243; s. 81, ch. 83-216; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.
625.313 Securities of certain agencies.—An insurer may invest in bonds, debentures, or other securities of the following agencies, whether or not such obligations are guaranteed by the Government of the United States:
(1) The Federal National Mortgage Association, and stock thereof when acquired in connection with the sale of mortgage loans to such association.
(2) Any federal land bank, when such securities are issued under provisions of the Act of Congress entitled the 1“Federal Farm Loan Act” and approved July 17, 1916, and any acts amendatory or supplementary to that act.
(3) Any federal home loan bank, when such securities are issued under provisions of the Act of Congress entitled “Federal Home Loan Bank Act” and approved July 22, 1932.
(4) The Home Owners’ Loan Corporation, created by the Act of Congress entitled “Home Owners’ Loan Act of 1933” and approved June 13, 1933.
(5) Any federal intermediate credit bank, created by the Act of Congress entitled 2“Agricultural Credits Act of March 4, 1923.”
(6) The Central Bank for Cooperatives and regional banks for cooperatives organized under the 3Farm Credit Act of 1933, or by any of such banks; and any notes, bonds, debentures, or other similar obligations, consolidated or otherwise, issued by farm credit institutions pursuant to the Farm Credit Act of 1971, Pub. L. No. 92-181.
(7) Any other similar agency of the Government of the United States which is of similar financial quality.
History.—s. 138, ch. 59-205; s. 3, ch. 74-92; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 105, 122, 809(1st), ch. 82-243; s. 82, ch. 83-216; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.
625.314 Public housing obligations.—An insurer may invest in the bonds, debentures, or other securities of public housing authorities, issued under the provisions of the Act of Congress entitled the “Housing Act of 1949” and approved July 1949; the 1“Municipal Housing Commission Act” or the 1“Rural Housing Commission Act,” and any additional amendments, or issued by any public housing authority or agency in the United States, if such bonds, debentures, or other securities are secured by a pledge of annual contributions to be paid by the United States or any agency thereof.
History.—s. 139, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 122, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.
625.315 Obligations of State Board of Education.—An insurer may invest in bonds or motor vehicle anticipation certificates issued by the State Board of Education of Florida under authority of s. 18, Art. XII of the State Constitution of 1885 as adopted by s. 9(d), Art. XII of the State Constitution, and the additional provisions of s. 9(d).
History.—s. 140, ch. 59-205; s. 31, ch. 69-216; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 122, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.
625.316 International development banks.—An insurer may invest in obligations issued, assumed, or guaranteed by the International Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank, the African Development Bank, or the International Finance Corporation.
History.—s. 141, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 106, 122, 809(1st), ch. 82-243; s. 2, ch. 84-166; ss. 51, 187, 188, ch. 91-108; s. 4, ch. 91-429.
625.317 Corporate bonds and debentures.—An insurer may invest in bonds, notes, or other interest-bearing or interest-accruing obligations of any solvent corporation organized under the laws of the United States or Canada or under the laws of any state, the District of Columbia, any territory or possession of the United States, or any Province of Canada or in bonds or notes issued by the Citizens Property Insurance Corporation as authorized by s. 627.351(6).
History.—s. 142, ch. 59-205; s. 2, ch. 76-96; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 107, 122, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 882, ch. 2003-261.
625.318 Religious institution obligations.—An insurer may invest in secured obligations of duly constituted churches and of church holding companies.
History.—s. 143, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 108, 122, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.
625.319 Equipment trust certificates.—An insurer may invest in equipment trust obligations or certificates adequately secured and evidencing an interest in transportation equipment, wholly or in part within the United States, and the right to receive determined portions of rental, purchase, or other fixed obligatory payments for the use or purchase of such transportation equipment.
History.—s. 144, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 122, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.
625.320 Building and loan or savings and loan association accounts.—An insurer may invest in share or saving accounts of savings and loan associations or building and loan associations.
History.—s. 145, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 1, ch. 78-64; ss. 2, 3, ch. 81-318; ss. 122, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.
625.321 Policy loans.—A life insurer may lend to its policyholder, upon pledge of the policy as collateral security, any sum not exceeding the cash loan value of the policy; or may lend against pledge or assignment of any of its supplementary contracts or other contracts or obligations, so long as the loan is adequately secured by such pledge or assignment. Loans so made are eligible investments of the insurer.
History.—s. 146, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 122, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.
625.322 Collateral loans.—An insurer may invest in loans with a maturity not in excess of 12 years from the date thereof which are secured by the pledge of assets permitted by part I of this chapter. Loans made pursuant to this section shall not be admitted as an asset when it is considered probable that any portion of the amounts due under the contractual terms of the loan will not be collected. Collateral loans reported in financial statements filed with the office shall not exceed the value of the collateral held by the company.
History.—s. 147, ch. 59-205; s. 3, ch. 70-188; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 122, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 20, ch. 2001-213; s. 883, ch. 2003-261.
625.323 Ship loans.—An insurer may invest in:
(1) Bonds, notes, or other evidences of indebtedness which are secured by mortgages on barges, tugboats, ships, or other shipping vessels if payment of such indebtedness or part thereof is insured by the Secretary of Commerce under the terms of the Federal Ship Mortgage Insurance Act, as amended.
(2) Bonds, notes, or other evidences of indebtedness which are secured by mortgages on barges, tugboats, ships, or other shipping vessels which are under lease or charter party to a solvent institution whose fixed interest obligations, if any, would be eligible investments under s. 625.317 (corporate obligations), and if such lease or charter party is assigned as additional security for such bonds, notes, or other evidences of indebtedness.
History.—s. 148, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 122, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.
625.324 Corporate stocks.—An insurer may invest in stocks, common or preferred, of any corporation created or existing under the laws of the United States or of any state or Canada or any province thereof. An insurer may invest in stocks, common or preferred, of any corporation created or existing under the laws of any foreign country other than Canada if such stocks are listed and traded on a national securities exchange in the United States or, in the alternative, if such investment in stocks of any corporation created or existing under the laws of any foreign country are first approved by the office. Nothing in this section shall apply to qualifying investments made by an insurer in a foreign country under authority of s. 625.326.
History.—s. 149, ch. 59-205; s. 4, ch. 70-188; s. 1, ch. 70-439; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 109, 122, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 884, ch. 2003-261.
625.325 Investments in subsidiaries and related corporations.—
(1) AUTHORIZATION.—Any insurer, either by itself or in cooperation with one or more persons, may organize or acquire one or more subsidiaries, subject to the limitation of subsection (2). Such subsidiaries may conduct any kind of business, and their authority to do so shall not be limited by reason of the fact that they are subsidiaries of an insurer.
(2) ADDITIONAL INVESTMENT AUTHORITY.—In addition to investments in common stock, preferred stock, debt obligations, and other securities permitted under all other sections of this chapter, an insurer may also invest and maintain investments in common stock, preferred stock, debt obligations, and other securities of one or more subsidiaries or related corporations. At the time any such new or additional investment is made, the sum of the insurer’s cost of such investment and the aggregate values as permitted by s. 625.151(3) of all existing investments in such corporations shall not exceed the lesser of:
(a) Ten percent of the insurer’s admitted assets; or
(b) Fifty percent of the insurer’s surplus as to policyholders in excess of the minimum surplus as to policyholders required to be maintained by the insurer under this code.
(3) DEFINITIONS.—For purposes of this section:
(a) “Subsidiary” means a corporation in which the insurer holds, directly or indirectly through an intermediary, sufficient stock to give the insurer a controlling interest.
(b)1. “Related corporation” means a corporation in which the insurer’s parent corporation holds, directly or indirectly through an intermediary, sufficient stock to give the insurer’s parent corporation a controlling interest.
2. As to a limited reciprocal, “related corporation” means any corporation that is a member of the limited reciprocal.
(4) DEBT OBLIGATIONS.—Debt obligations, other than mortgage loans, made under the authority of this section must meet amortization requirements in accordance with the latest edition of the publication “Valuation of Securities” by the National Association of Insurance Commissioners or its successor organization; provided that such amortization methodology is substantially similar to the methodology used by the National Association of Insurance Commissioners in its July 1, 2002, edition of such publication.
(5) INVESTMENT INCLUDES LOANS.—For purposes of this section, an insurer’s investment in a subsidiary or related corporation shall be deemed to include all sums loaned to such subsidiary or related corporation.
(6) CONSTRUCTION.—Nothing in this section shall be construed to expand, extend, or otherwise enlarge the provisions of chapter 687.
(7) APPLICABILITY.—This section does not apply to a foreign insurer’s investments in its subsidiaries or related corporations if:
(a) The foreign insurer is domiciled in a state that is a member of the National Association of Insurance Commissioners.
(b) Such investments in the foreign insurer’s subsidiaries or related corporations are:
1. Permitted under the laws of the foreign insurer’s state of domicile.
2.a. Assigned a rating of 1, 2, or 3 by the Securities Valuation Office of the National Association of Insurance Commissioners; or
b. Qualify for the National Association of Insurance Commissioners’ filing exemption rule and assigned a rating by a nationally recognized statistical rating organization that would be equivalent to a rating of 1, 2, or 3 by the Securities Valuation Office.
History.—s. 150, ch. 59-205; s. 1, ch. 65-17; ss. 13, 35, ch. 69-106; s. 5, ch. 70-188; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 110, 122, 809(1st), ch. 82-243; s. 46, ch. 89-360; s. 8, ch. 90-119; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 885, ch. 2003-261; s. 2, ch. 2018-131.
625.3255 Capital participation instrument.—An insurer may invest in any capital participation instrument or evidence of indebtedness issued by the Department of Commerce pursuant to the Florida Small and Minority Business Assistance Act.
History.—ss. 16, 31, ch. 85-104; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 21, ch. 2007-157; s. 430, ch. 2011-142; s. 140, ch. 2023-173.
625.326 Foreign investments.—An insurer authorized to transact insurance in a foreign country may have funds invested in such securities as may be required for such authority and for the transaction of such business. Canadian securities eligible for investment under other provisions of this part are not subject to this section. Subject to the approval of the office:
(1) An insurer may invest in eurodollar certificates of deposit issued by foreign branches of United States commercial banks.
(2) In addition to Canadian securities eligible for investment and to investments in countries in which an insurer transacts insurance, an insurer may invest in bonds, notes, or stocks of any foreign country or corporation if such security meets the general requirements of s. 625.303 and does not exceed, in total, 5 percent of admitted assets.
History.—s. 151, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 111, 122, 809(1st), ch. 82-243; s. 11, ch. 82-386; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 886, ch. 2003-261.
625.3262 State of Israel obligations.—An insurer may invest in bonds, notes, warrants, and other evidences of indebtedness which are direct obligations of the State of Israel or for which the full faith and credit of the State of Israel is pledged for the payment of principal and interest.
History.—s. 1, ch. 78-114; s. 2, ch. 81-318; ss. 122, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.
625.327 Mortgage loans.—
(1) An insurer may invest any of its funds in bonds, notes, or other evidences of indebtedness which are secured by first mortgages or deeds of trust upon improved real property located in the United States or Canada or which are secured by first mortgages or deeds of trust upon leasehold estates having an unexpired term of not less than 40 years (inclusive of the term or terms which may be provided by enforceable options of renewal) in improved real property located in the United States or Canada. In all cases the security for the loan must be a first lien upon such real property, and there must not be any condition or right of reentry or forfeiture not insured against under which, in the case of real property other than leaseholds, such lien can be cut off or subordinated or otherwise disturbed or under which, in the case of leaseholds, the insurer is unable to continue the lease in force for the duration of the loan. Nothing herein shall prohibit any investment by reason of the existence of any prior lien for ground rents, taxes, assessments, or other similar charges not yet delinquent. This section shall not be deemed to prohibit investment in mortgages or similar obligations when made under s. 625.326.
(2) “Improved real estate” means all farmlands used for tillage, crops, or pasture; timberlands; and all real estate on which permanent improvements, and improvements under construction or in process of construction, suitable for residential, institutional, commercial, or industrial use are situated.
(3) No such mortgage loan or loans made or acquired by an insurer on any one property shall, at the time of investment by the insurer, exceed the larger of the following amounts, as applicable:
(a) Ninety-five percent of the value of the real property or leasehold securing the same in the case of a mortgage on a dwelling primarily intended for occupancy by not more than four families if they insure down to 75 percent with a licensed mortgage insurance company, or 75 percent of such value in the case of other real estate mortgages;
(b) The amount of any insurance or guaranty of such loan by the United States or by any agency or instrumentality thereof; or
(c) The percentage-of-value limit on the amount of the loan applicable under paragraph (a), plus the amount by which the excess of such loan over such percentage-of-value limit is insured or guaranteed by the United States or by any agency or instrumentality thereof.
(4) In the case of a purchase money mortgage given to secure the purchase price of real estate sold by the insurer, the amount so loaned or invested shall not exceed the unpaid portion of the purchase price.
(5) Nothing in this part shall be deemed to prohibit an insurer from renewing or extending a loan for the original or a lesser amount where a shrinkage in value of the real estate securing the loan would cause its value to be less than the amount otherwise required in relation to the amount of the loan.
(6) The provisions of this section supersede any inconsistent provision of s. 106 of the Secondary Mortgage Market Enhancement Act of 1984 (15 U.S.C. s. 77r).
History.—ss. 152, 153, ch. 59-205; s. 2, ch. 65-17; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 112, 122, 809(1st), ch. 82-243; ss. 52, 187, 188, ch. 91-108; s. 4, ch. 91-429.
Note.—Consolidation of s. 625.327 and former s. 625.328.
625.329 Chattel mortgages.—
(1) In connection with a mortgage loan on the security of real estate designed and used primarily for residential purposes only, which mortgage loan was acquired pursuant to s. 625.327, an insurer may lend or invest an amount not exceeding 20 percent of the amount loaned on or invested in such real estate mortgage on the security of a chattel mortgage to be amortized by regular periodic payments within a term of not more than 5 years, and representing a first and prior lien, except for taxes not then delinquent, on personal property constituting durable equipment owned by the mortgagor and kept and used in the mortgaged premises.
(2) For the purposes of this section, the term “durable equipment” includes only mechanical refrigerators, air-conditioning equipment, mechanical laundering machines, heating and cooking stoves and ranges, and, in addition, in the case of apartment houses and hotels, room furniture and furnishings.
(3) Prior to the acquisition of a chattel mortgage hereunder, items of property to be included therein shall be separately appraised by a qualified appraiser and the fair market value thereof determined. No such chattel mortgage loan shall exceed in amount the same ratio of loan to the value of the property as is applicable to the companion loan on the real property.
(4) This section shall not prohibit an insurer from taking liens on personal property as additional security for any investment otherwise eligible under this part.
History.—s. 154, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 122, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.
625.330 Special investments by title insurer.—
(1) In addition to other investments eligible under this part, a title insurer may invest and have invested an amount not exceeding the greater of $300,000 or 50 percent of that part of its surplus as to policyholders which exceeds the minimum surplus required by s. 624.408 in its abstract plant and equipment, in loans secured by mortgages on abstract plants and equipment, and, with the consent of the office, in stocks of abstract companies. If the insurer transacts kinds of insurance in addition to title insurance, for the purposes of this section its paid-in capital stock shall be prorated between title insurance and such other insurances upon the basis of the reserves maintained by the insurer for the various kinds of insurance; but the capital so assigned to title insurance shall in no event be less than $100,000.
(2) Subsection (1) does not apply to a business trust insurer. Such an insurer may invest and have invested not exceeding the greater of $300,000 or 50 percent of its net trust fund in excess of the reserve provided for under s. 625.111 in abstract plants, stock in abstract companies, or corporations controlled by the business trust and created for developing and servicing abstract plants.
(3) Investments authorized by this section shall not be credited against the insurer’s required unearned premium or guaranty fund reserve provided for under s. 625.111.
History.—s. 155, ch. 59-205; ss. 13, 35, ch. 69-106; s. 1, ch. 70-436; s. 1, ch. 70-439; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 113, 122, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 25, ch. 93-410; s. 887, ch. 2003-261.
625.331 Special consent investments.—
(1) After satisfying the requirements of this part, any funds of an insurer in excess of its reserves and policyholders’ surplus required to be maintained may be invested:
(a) Without limitation in any investments otherwise authorized by this part; or
(b) In such other investments not specifically authorized by this part as long as such investments do not exceed the lesser of 5 percent of the insurer’s total admitted assets or 25 percent of the amount by which the insurer’s policyholders’ surplus exceeds the minimum required to be maintained.
The limitations in paragraph (b) may be exceeded if consented to in writing by the office.
(2) In no case shall the investments authorized under this section being held by an insurer be greater than the amount by which the insurer’s policyholders’ surplus exceeds the minimum required to be maintained.
(3) Notwithstanding the provisions of this section, an insurer may not invest in investments prohibited by this code.
History.—s. 156, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 114, 122, 809(1st), ch. 82-243; s. 2, ch. 89-227; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 888, ch. 2003-261.
625.332 Prohibited investments and investment underwriting.—
(1) In addition to investments excluded pursuant to other provisions of this code, an insurer shall not directly or indirectly invest in or lend its funds upon the security of:
(a) Issued shares of its own capital stock, except for the purpose of mutualization under s. 628.431, or in connection with a plan approved by the office for purchase of such shares by the insurer’s officers, employees, or agents. No such stock shall, however, constitute an asset of the insurer in any determination of its financial condition.
(b) Except with the consent of the office, securities issued by any corporation or enterprise the controlling interest of which is, or will after such acquisition by the insurer be, held directly or indirectly by the insurer or any combination of the insurer and the insurer’s directors, officers, parent corporation, subsidiaries, or controlling stockholders. Investments in subsidiaries under s. 625.325 shall not be subject to this provision.
(c) Any note or other evidence of indebtedness of any director, officer, or controlling stockholder of the insurer, except as to policy loans authorized under s. 625.321.
(2) No insurer shall underwrite or participate in the underwriting of an offering of securities or property by any other person.
History.—s. 157, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 122, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 889, ch. 2003-261.
625.333 Real estate, in general.—An insurer shall not directly or indirectly acquire or hold real estate except as authorized in this section.
(1) An insurer may acquire and hold:
(a) Land and buildings thereon used or acquired for use as its principal home office and branch offices for the convenient transaction of its own business.
(b) Real property acquired in satisfaction in whole or in part of loans, mortgages, liens, judgments, decrees, or debts previously owing to the insurer, in the course of its business.
(c) Real property acquired in part payment of the consideration on the sale of other real property owned by it, if such transaction effects a net reduction in the insurer’s investment in real estate.
(d) Real property acquired by gift or devise or through merger, consolidation, or bulk reinsurance of another insurer under this code.
(e) Additional real property and equipment incident to real property, if necessary or convenient for the enhancement of the marketability or sale value of real property previously acquired or held by it under paragraphs (b)-(d), but subject to the prior written approval of the office.
(2) An insurer may acquire and hold real property for the purposes of investment subject to the following conditions:
(a) The amount shall not exceed 5 percent of the insurer’s admitted assets.
(b) The amount in any one property shall not exceed 1 percent of the insurer’s admitted assets.
(c) The amount in unimproved land shall not exceed 0.5 percent of the insurer’s admitted assets.
(d) There shall be no time limit for the disposal of investment real estate.
(3) The amount in real property acquired and held by an insurer shall not exceed 15 percent of the insurer’s admitted assets, but the office may grant permission to the insurer to invest in real property in such increased amount as it may deem proper.
History.—s. 158, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 115, 122, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 890, ch. 2003-261.
625.338 Time limit for disposal of ineligible property and securities; effect of failure to dispose.—
(1) Any property or securities lawfully acquired by an insurer which it could not otherwise have invested in or loaned its funds upon at the time of such acquisition shall be disposed of within 3 years from the date of acquisition, unless within such period the security has attained to the standard of eligibility except that any security or property acquired under any agreement of bulk reinsurance, merger, or consolidation may be retained for a longer period if so provided in the plan for such reinsurance, merger, or consolidation as approved by the office under chapter 628. Upon application by the insurer and proof that forced sale of any such property or security would materially injure the interests of the insurer, the office may extend the disposal period for an additional reasonable time.
(2) Any property or securities lawfully acquired and held by an insurer after expiration of the period for disposal thereof or any extension of such period granted by the office shall not be allowed as an asset of the insurer.
History.—ss. 163, 164, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 120, 122, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 891, ch. 2003-261.
Note.—Consolidation of s. 625.338 and former s. 625.339.
625.340 Investments of foreign or alien insurers.—The investment portfolio of a foreign or alien insurer shall be as permitted by the laws of its domicile if of a quality substantially as high as that required under this chapter for similar funds of like domestic insurers.
History.—s. 165, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 121, 122, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.
PART III
ADMINISTRATION OF DEPOSITS625.50 Authorized deposits of insurers and agents.
625.51 Purpose of deposit.
625.52 Securities eligible for deposit.
625.53 Depository.
625.55 Custodial arrangements.
625.56 Registration, conveyance of assets or securities.
625.57 Appraisal.
625.58 Excess and deficit deposits.
625.59 Rights of insurer during solvency.
625.60 Levy upon deposit.
625.62 Duration and release of deposit.
625.63 Proofs for release of deposit.
625.50 Authorized deposits of insurers and agents.—The following deposits of insurers and agents when made through the department shall be accepted and held and shall be subject to the provisions of this chapter:
(1) Deposits required under this code for authority to transact insurance in this state.
(2) Deposits of domestic insurers when made pursuant to the laws of other states, provinces, and countries as requirement for authority to transact insurance in such state, province, or country.
(3) Deposits in such additional amounts as are permitted to be made under s. 625.58.
History.—s. 166, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 123, 134, 809(1st), ch. 82-243; s. 9, ch. 90-119; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.
625.51 Purpose of deposit.—Such deposits shall be held for the following purposes:
(1) Deposits made in this state under ss. 624.411 and 624.412 shall be held for the purposes stated in the respective sections.
(2)(a) A deposit made in this state by a domestic insurer transacting insurance in another state, province, or country, and as required by the laws of such state, province, or country, shall be held for the protection of the insurer’s policyholders or policyholders and creditors.
(b) The deposit shall be certified to another state, province, or country upon request of the insurer.
(c) The deposit shall be maintained at the certified par value for any state, province, or country furnishing notification of reliance to the department.
(3) Deposits required pursuant to the retaliatory provision, s. 624.5091, shall be held for such purposes as are required by such law and as specified by the order of the department by which the deposit is required.
History.—s. 167, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 124, 134, 809(1st), ch. 82-243; s. 41, ch. 90-132; ss. 53, 187, 188, ch. 91-108; s. 4, ch. 91-429.
625.52 Securities eligible for deposit.—
(1) All deposits by insurers and agents required for authority to transact insurance in this state must be limited to the following types:
(a) Cash delivered to the department for the Treasury Cash Deposit Trust Fund.
(b) United States Government bonds, notes, and bills for which the full faith and credit of the Government of the United States is pledged for the payment of principal and interest.
(c) United States and Canadian public bonds and notes of any state or of the District of Columbia, or the Government of Canada or any province thereof, for which the full faith and credit of the issuer has been pledged for the payment of principal and interest.
(d) United States and Canadian county, provincial, municipal, and district bonds and notes for which the issuer has lawful authority to levy taxes or make assessments for the payment of principal and interest.
(e) Bonds and notes of any federal agency which are guaranteed as to payment of principal and interest by the United States.
(f) International development bank bonds and notes issued, assumed, and guaranteed by the International Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank, the African Development Bank or the International Finance Corporation.
(g) Corporate bonds and notes of any private corporations that are not affiliates or subsidiaries of the insurer, which corporations are organized under the laws of the United States, Canada, any state, the District of Columbia, any territory or possession of the United States, or any province of Canada.
(h) Certificates of deposit.
(2) To be eligible for deposit under subsection (1), any bond or note must have the following characteristics:
(a) The bond or note must be interest-bearing or interest-accruing, and the insurer must be the exclusive owner of the interest accruing thereon and entitled to receive the interest for its account.
(b) The issuer must be in a solvent financial condition and the bond or note must not be in default.
(c) The bond or note must be rated in one of the four highest classifications by an established, nationally recognized investment rating service or must have been given a rating of 1 by the Securities Valuation Office of the National Association of Insurance Commissioners.
(d) The market value of the bond or note must be readily ascertainable.
(e) The bond or note must be the direct obligation of the issuer.
(f) The bond or note must be stated in United States dollar denominations.
(g) The bond or note must be eligible for book-entry form on the books of the Federal Reserve Book-Entry System or in a depository trust clearing system.
(3) To be eligible for deposit under paragraph (1)(h), any certificate of deposit must have the following characteristics:
(a) The certificate of deposit must be issued by a bank, savings bank, or savings association that is organized under the laws of the United States, of this state, or of any other state and that has a principal office or branch office in this state which is authorized to receive deposits in this state.
(b) The certificate of deposit must be interest-bearing and may not be issued in discounted form.
(c) The certificate of deposit must be issued for a period of not less than 1 year.
(d) The issuing bank, savings bank, or savings association must agree to the terms and conditions of the department regarding the rights to the certificate of deposit and must have executed a written certificate of deposit agreement with the department. The terms and conditions of such agreement shall include, but need not be limited to:
1. Exclusive authorized signature authority for the Chief Financial Officer.
2. Agreement to pay, without protest, the proceeds of its certificate of deposit to the department within 30 business days after presentation.
3. Prohibition against levies, setoffs, survivorship, or other conditions that might hinder the department’s ability to recover the full face value of a certificate of deposit.
4. Instructions regarding interest payments, renewals, taxpayer identification, and early withdrawal penalties.
5. Agreement to be subject to the jurisdiction of the courts of this state, or those of the United States which are located in this state, for the purposes of any litigation arising out of this section.
6. Such other conditions as the department requires.
(4) The office or department may refuse to accept certain securities or refuse to accept the reported market value of certain securities offered pursuant to this section in order to ensure that sufficient cash and securities are on hand to meet the purposes of the deposit. In making a refusal under this subsection, the guidelines for use of the office or department may include, but need not be limited to, whether the market value of the securities cannot be readily ascertained and the lack of liquidity of the securities. Securities refused under this subsection are not acceptable as deposits.
(5) All deposits required of a domestic insurer pursuant to the laws of another state, province, or country must be comprised of securities of the kinds required under subsection (1), having the characteristics required under subsections (2) and (3), and permitted by the laws of the other state, province, or country, except common stocks, mortgages or loans of any kind, real estate investment trust funds or programs, commercial paper, and letters of credit.
(6) Deposits of foreign insurers made in this state under the retaliatory provision, s. 624.5091, must consist of such securities or assets as are required by the department pursuant to the retaliatory provision.
History.—s. 168, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 125, 134, 809(1st), ch. 82-243; s. 12, ch. 82-386; s. 83, ch. 83-216; s. 12, ch. 85-245; s. 6, ch. 87-331; s. 47, ch. 89-360; s. 10, ch. 90-119; s. 42, ch. 90-132; ss. 54, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 22, ch. 95-211; s. 18, ch. 99-3; s. 5, ch. 2000-352; s. 892, ch. 2003-261.
625.53 Depository.—
(1) Except as provided in s. 625.55, all deposits made in this state under this code shall be made with the department. The department shall take, receipt for, and hold in trust deposits made under this code for the purpose or purposes for which the respective deposits were so made, subject to the provisions of this part.
(2) The department shall hold all such deposits in safekeeping in the vaults located in the offices of the department.
(3) Securities or other assets deposited with or through the department under this part by a foreign or alien insurer shall not, on account of such securities or assets thus being in this state, be subject to taxation.
(4) The state shall be responsible for the safekeeping of all securities or other assets deposited with the department under this code.
History.—s. 169, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 126, 134, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 893, ch. 2003-261.
625.55 Custodial arrangements.—
(1) In lieu of a deposit being made with it in fact, the department in its discretion may permit or require that the deposit be made with and held by the trust department of a national bank organized and existing under the laws of the United States Government or a state bank or savings and loan organized and existing under the laws of this state, provided that the national or state bank or the savings and loan is approved by the department for this purpose and under custodial arrangements likewise approved by the department, which arrangements may include the use of the Federal Reserve book-entry system or depository trust clearing systems established to hold and transfer securities by computerized book-entry systems.
(2) All such custodial arrangements shall comply in substance with the requirements of this code as to like deposits with the department of other insurers; as to the amount, purposes, maintenance, replenishment, release, and withdrawal of such deposits or part thereof; as to the rights of the insurer therein; and in all other respects except as to actual custody.
(3) The form and terms of all such custodial agreements shall be as prescribed or approved by the department consistent with the applicable provisions of this code.
(4) The compensation and expenses of any such custodian shall be borne by the insurer.
(5) The department or office may at any time, in its discretion, terminate any such custodial arrangement and require the deposit represented thereby to be made with it directly as otherwise provided for under this code.
History.—s. 171, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 128, 134, 809(1st), ch. 82-243; s. 13, ch. 85-245; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 894, ch. 2003-261.
625.56 Registration, conveyance of assets or securities.—
(1) The insurer shall duly register in the name of the Chief Financial Officer all securities being deposited with the department under this code which are not negotiable by delivery.
(2) In the case of securities or assets held under custodial arrangements pursuant to s. 625.55, the custodian’s receipt therefor shall be delivered to the department in trust if negotiable, or assigned to it so that legal title to such securities or assets is vested in the department.
(3) Upon release to the insurer, or other person entitled thereto, of any such security or asset, the department shall reassign, transfer, or reconvey the same to such insurer or person.
History.—s. 172, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 129, 134, 809(1st), ch. 82-243; s. 13, ch. 82-386; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 895, ch. 2003-261.
625.57 Appraisal.—The office or department may, in its discretion, prior to acceptance for deposit of any particular asset or security, or at any time thereafter while so deposited, have the same appraised or valued by competent appraisers. The reasonable costs of any such appraisal or valuation shall be borne by the insurer.
History.—s. 173, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 134, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 896, ch. 2003-261.
625.58 Excess and deficit deposits.—
(1) If securities or assets deposited by an insurer under this part are subject to material fluctuations in market value, the office or department may, in its discretion, require the insurer to deposit and maintain on deposit additional securities or assets in an amount as may be reasonably necessary to assure that the deposit will at all times have a market value of not less than the amount specified under or pursuant to the law by which the deposit is required.
(2) The insurer is responsible at all times for having deposited with, or pledged to, if custodial arrangements are used, the department eligible securities which have a market value of not less than the amount specified pursuant to the law by which the deposit is required. If for any reason the market value of assets and securities of an insurer held on deposit in this state under this code falls below the amount required, the insurer shall promptly deposit other or additional assets or securities eligible for deposit sufficient to cure such deficiency. If the insurer has failed to cure the deficiency within 30 days after receipt of notice thereof by registered or certified mail from the office, the office shall revoke the insurer’s certificate of authority or may take such other administrative action as provided by law.
(3) An insurer may at its option deposit assets or securities in an amount exceeding its deposit required or otherwise permitted under this code by not more than 3 times the amount of the required or permitted deposit for the purpose of satisfying the office that the insurer’s obligations in this state will be met. During the solvency of the insurer, the amount of any excess or a portion thereof shall be released to the insurer if the office is satisfied that the insurer’s obligations in this state will be met. During the insolvency of the insurer, the amount of any excess deposit shall be released only as provided in s. 625.62.
History.—s. 174, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 130, 134, 809(1st), ch. 82-243; s. 14, ch. 85-245; ss. 55, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 897, ch. 2003-261.
625.59 Rights of insurer during solvency.—So long as the insurer remains solvent and is in compliance with this code, it may:
(1) Demand, receive, sue for, and recover the income from the securities or assets deposited;
(2) Exchange and substitute for the deposited securities or assets, or any part thereof, other eligible securities and assets of equivalent or greater value; and
(3) At any reasonable time inspect any such deposit.
History.—s. 175, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 134, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.
625.60 Levy upon deposit.—No judgment creditor or other claimant of an insurer shall have the right to levy upon any of the assets or securities held in this state as a deposit for the protection of the insurer’s policyholders or policyholders and creditors. As to deposits made pursuant to the retaliatory provision, s. 624.5091, levy thereupon shall be permitted if so provided in the order of the department under which the deposit is required.
History.—s. 176, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 134, 809(1st), ch. 82-243; s. 43, ch. 90-132; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.
625.62 Duration and release of deposit.—
(1)(a) Every certificate of deposit filed and every deposit made in this state by an insurer, prior to or pursuant to this code, made voluntarily or pursuant to specific requirements shall be subject to the applicable provisions of this code as amended from time to time.
(b) If the deposit is required under the retaliatory provision, s. 624.5091, the deposit shall be held for so long as the basis for such retaliation exists.
(c) If the deposit is required under the requirements of another state, province, or country and is held pursuant to s. 625.51(2), the deposit shall be held for so long as another state, province, or country has filed notification of reliance on the deposit and has denied release authorization.
(2) Any such deposit, whether in the form of a certificate of deposit or otherwise, shall be released and returned:
(a) To the insurer during solvency to the extent such deposit is in excess of the amount required;
(b) To the insurer, during solvency, upon its written request, to the extent such deposit is in excess of the amount then required under this code; or
(c) To the insurer, during solvency, upon its written request, when such insurer has met all requirements and the office is satisfied, or, for deposits made under s. 625.51(2) or (3), the department is satisfied, that the deposit is no longer necessary.
(d) Upon proper order of a court of competent jurisdiction, to the receiver, conservator, rehabilitator, liquidator of the insurer, or to any other properly designated official or officials who succeed to the management and control of the insurer’s assets.
History.—s. 178, ch. 59-205; s. 2, ch. 61-166; s. 2, ch. 63-19; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 132, 134, 809(1st), ch. 82-243; s. 44, ch. 90-132; ss. 56, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 898, ch. 2003-261.
625.63 Proofs for release of deposit.—
(1) Before authorizing the release of any deposit or excess portion thereof to the insurer, as provided in s. 625.62, the office or department shall require the insurer to file with the office or department a written statement in such form and with such verification as the office or department deems advisable setting forth the facts upon which it bases its entitlement to such release.
(2) If release of the deposit is claimed by the insurer upon the ground that its liabilities in this state, as to which the deposit was originally made and is held, have been assumed by another insurer authorized to transact insurance in this state, the insurer shall file with the office a duly attested copy of the contract or agreement of such reinsurance.
(3) Upon being satisfied by such statement and such other information and evidence as the office or department may reasonably require, and by such examination, if any, of the affairs of the insurer as it deems advisable to make, that the insurer is entitled to the release of its deposits or excess portions thereof as provided in s. 625.62, the office or department shall release, or authorize the custodian bank or trust company in the case of deposits made under s. 625.55 to release, the deposit or excess portion thereof to the insurer or its authorized representative. The office and department shall have no liability as to any such release so made or authorized by it in good faith.
(4) The department may release a deposit upon sending notification by certified mail to the public official having supervision over insurers in another state, province, or country that has filed a notification of reliance on a deposit made pursuant to s. 625.51(2) unless the release is denied in writing to the department by another state, province, or country within 90 days. The department has no liability as to any such release so made or authorized by it in good faith.
(5) Upon the failure of the office or department to release any deposit whether in the form of a certificate of deposit or otherwise or any excess portion thereof, requested as provided in s. 625.62 upon compliance by the insurer with the requirements of this section or within 90 days after receipt of the insurer’s written request, whichever is later, the office or department shall, upon petition by the insurer, post or cause to be posted a notice of pendency of the insurer’s request, at the place customarily used for the posting of public notices, at the courthouse of each county, and shall make a copy of such notice available to the established news agencies having offices at Tallahassee, Florida. The commission or department may by rule prescribe the general form of such notice, shall specify the insurer’s name, or may list such names when more than one request is pending at the same time. Such notice shall state therein that such insurer or insurers have petitioned for the release and return of deposits pursuant to and in compliance with s. 625.62 and this section; that the office or department has no information upon which to base a finding that the insurer or insurers named in the notice are not lawfully entitled to obtain the release and return of such deposits; and that, unless such information is presented to it within 90 days from the date specified in the notice, such deposits must be returned to the insurer or insurers. In the event that no such information is presented to the office or department within such 90-day period, it shall thereupon release and return the deposit or deposits as requested by the insurer or insurers whose request was not challenged. In the event that such information is presented to the office or department within that period, it shall refuse to release or return the deposit of the insurer or insurers concerned and shall hold a hearing with respect thereto upon the request of such insurer or insurers.
History.—s. 179, ch. 59-205; s. 3, ch. 63-19; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 133, 134, 809(1st), ch. 82-243; ss. 57, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 899, ch. 2003-261.
PART IV
DOMESTIC STOCK INSURERS;EQUITY SECURITIES
625.75 Certain persons and directors and officers of domestic stock insurer to file statements.
625.76 Preventing unfair use of information; insurer to recover profit by suit.
625.765 Exemptions from ss. 625.75 and 625.76.
625.77 Unlawful to sell equity security not owned; delayed delivery.
625.78 Certain sale and purchase exempted; investment account.
625.79 Certain foreign or domestic arbitrage transactions exempted.
625.80 “Equity security” defined.
625.81 Equity securities of certain domestic stock insurer exempted.
625.82 Rules.
625.83 Failure to file reporting forms.
625.75 Certain persons and directors and officers of domestic stock insurer to file statements.—Every person who is directly or indirectly the beneficial owner of more than 10 percent of any class of any equity security of a domestic stock insurer, or who is a director or an officer of a domestic stock insurer, shall file with the office within 10 days after becoming such beneficial owner, director, or officer a statement, in such form as the commission may by rule prescribe, of the amount of all equity securities of such insurer of which he or she is the beneficial owner; within 10 days after the close of each calendar month thereafter, if there has been a change in such ownership during such month, he or she shall file with the office a statement, in such form as the commission may by rule prescribe, indicating his or her ownership of such equity securities at the close of the calendar month and such changes in his or her ownership of such equity securities as have occurred during such calendar month.
History.—s. 1, ch. 65-18; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 135, 143, 809(1st), ch. 82-243; s. 84, ch. 83-216; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 201, ch. 97-102; s. 900, ch. 2003-261.
625.76 Preventing unfair use of information; insurer to recover profit by suit.—
(1) Any profit realized by a person required to report pursuant to s. 625.75 from any purchase and sale, or sale and purchase, within a period of less than 6 months, of any equity security of an insurer named in such report shall inure to and be recoverable by the insurer, unless such security was acquired in good faith in connection with a debt contracted prior to the establishment of the relationship to the insurer reported under s. 625.75.
(2) Suit to recover such profit may be instituted at law or in equity in any court of competent jurisdiction by the insurer, or by the owner of any security of the insurer in the name and in behalf of the insurer if the insurer fails or refuses to bring such suit within 60 days after request or fails diligently to prosecute the same thereafter.
(3) This section shall not be construed to cover any transaction by a person who was not required both at the time of purchase and of sale to comply with s. 625.75.
History.—s. 1, ch. 65-18; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 136, 143, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.
625.765 Exemptions from ss. 625.75 and 625.76.—The commission may adopt by rule exemptions from ss. 625.75 and 625.76 for transactions that are not subject to s. 628.461 and that are the result of proceedings in probate, incompetency, or bankruptcy; sales of securities by odd-lot securities dealers; small transactions by gift which do not exceed $3,000 over any 6-month period; transactions that are effected in connection with the distribution of a substantial block of securities; acquisitions of shares of stock and stock options under a stock bonus plan, stock option plan, or similar plan; securities acquired by redeeming other securities by an insurer; consolidations or mergers of insurers that hold over 85 percent of the companies being merged or consolidated; acquisitions or dispositions of an equity security involved in the deposit of the security under, or the withdrawal of the security from, a voting trust or deposit agreement; and conversions of an insurer’s equity securities into another equity security of the same insurer. The commission may limit by rule the scope of exemptions and provide conditions for exemptions as necessary to maintain the purpose and intent of ss. 625.75 and 625.76 and prevent the circumvention of ss. 625.75 and 625.76.
History.—s. 5, ch. 2000-370; s. 901, ch. 2003-261.
625.77 Unlawful to sell equity security not owned; delayed delivery.—
(1) It is unlawful for any person reporting securities under s. 625.75 to sell, directly or indirectly, any equity security of a company named in such report if the person or the person’s principal:
(a) Does not own the security sold;
(b) If owning the security, does not deliver it against such sale within 20 days thereafter; or
(c) Does not within 5 days after such sale deposit it in the mails or other usual channels of transportation.
(2) No person shall be deemed to have violated this section if he or she proves that, notwithstanding the exercise of good faith, he or she was unable to make such delivery or deposit within such time.
History.—s. 1, ch. 65-18; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 137, 143, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 202, ch. 97-102.
625.78 Certain sale and purchase exempted; investment account.—The provisions of s. 625.76 do not apply to any purchase and sale, or sale and purchase, and the provisions of s. 625.77 do not apply to any sale, of an equity security of a domestic stock insurer not then or theretofore held by a person required to report under s. 625.75 in an investment account, which transaction is by a dealer in the ordinary course of business and incident to the establishment or maintenance by him or her of a primary or secondary market, other than on an exchange as defined in the Securities Exchange Act of 1934, for such security. The commission may, by such rules as it deems necessary or appropriate in the public interest, define and prescribe terms and conditions with respect to securities held in an investment account and transactions made in the ordinary course of business and incident to the establishment or maintenance of a primary or secondary market.
History.—s. 1, ch. 65-18; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 138, 143, 809(1st), ch. 82-243; s. 85, ch. 83-216; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 203, ch. 97-102; s. 902, ch. 2003-261.
625.79 Certain foreign or domestic arbitrage transactions exempted.—The provisions of ss. 625.75-625.77 do not apply to foreign or domestic arbitrage transactions unless made in contravention of rules that the commission has adopted.
History.—s. 1, ch. 65-18; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 139, 143, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 903, ch. 2003-261.
625.80 “Equity security” defined.—The term “equity security” when used in this part means:
(1) Any stock or similar security;
(2) Any security convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase such a security;
(3) Any such warrant or right; or
(4) Any other security which the commission deems to be of similar nature and considers necessary or appropriate, by such rules as it may prescribe in the public interest or for the protection of investors, to treat as an equity security.
History.—s. 1, ch. 65-18; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 140, 143, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 904, ch. 2003-261.
625.81 Equity securities of certain domestic stock insurer exempted.—The provisions of ss. 625.75-625.77 do not apply to equity securities of a domestic stock insurer if:
(1) Such securities are registered, or are required to be registered, pursuant to s. 12 of the Securities Exchange Act of 1934, as amended, or
(2) Such domestic stock insurer does not have any class of its equity securities held of record by 100 or more persons on the last business day of the year next preceding the year in which equity securities of the insurer would be subject to the provisions of ss. 625.75-625.77 except for the provisions of this subsection.
History.—s. 1, ch. 65-18; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 143, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.
625.82 Rules.—The commission may adopt such rules as are necessary for the execution of the functions vested in it by ss. 625.75-625.81 and may for such purpose classify domestic stock insurers, securities, and other persons or matters within its jurisdiction. No provision of ss. 625.75-625.77 imposing any liability shall apply to any act done or omitted in good faith in conformity with any rule of the commission, notwithstanding that such rule may, after such act or omission, be amended or rescinded or determined by judicial or other authority to be invalid for any reason.
History.—s. 1, ch. 65-18; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 141, 143, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 905, ch. 2003-261.
625.83 Failure to file reporting forms.—Any insurer who knowingly fails to file information, documents, or reports required to be filed under s. 625.75 or any rule thereunder shall forfeit to the state the sum of $100 for each day such failure to file continues. Such forfeiture shall be payable to the office to be deposited in the Insurance Regulatory Trust Fund and shall be recoverable in a civil suit in the name of the state. A time for filing may be extended for a reasonable period by the office.
History.—s. 1, ch. 71-87; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 142, 143, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 906, ch. 2003-261.